Cotton has been used in textile production for over 7000 years. Today, its uses have expanded to include products like fishnets and gunpowder. The early history of the cotton industry in the U.S. is marred by bloodshed and slavery. However, since the advent of mechanized harvesting, the U.S. has been able to maintain its position as the number one exporter of cotton without manual field labor. Cotton accounts for 35% of total fiber use around the globe. The U.S., along with India and China produce over 65% of cotton used by citizens of the world. Many developing countries find it hard to compete in the international market due to low product prices and a lack of fair trade, especially since their access to the same agricultural technology as affluent countries is limited.
|Cotton Futures Contract Specifications|
|Contract Size||50,000 pounds net weight|
|Price Quotation||Cents and hundredths of a cent per pound|
|Contract Months||March, May, July, October, December|
|Minimum Fluctuation||1/100 of a cent (one “point”) per pound equivalent to $5.00 per contract.|
|Settlement Procedure||Physical Delivery|
|Daily Price Limit||Futures contracts are subject to a daily price limit that can range from 3 to 7 cents per pound. Click to view Rules|
|Delivery Points||Galveston, TX; Houston, TX; New Orleans, LA;. Memphis, TN; Greenville/Spartanburg, S.C
Effective with the Dec 2013 expiry, New Orleans is no longer a delivery point and Dallas/Ft. Worth, TX becomes a delivery point.)
|Basis Grade||Quality: Strict Low Middling Staple Length: 1 2/32nd inc|
|First Day Notice||Five business days before the first delivery day of the spot contract month, which is the first business day of that month.|
|Last Trading Day||Seventeen business days from end of spot month.|
|Last Notice Day||Twelve business days from end of spot month.|
The four major cotton-producing countries are: China, India, the U.S., and Pakistan. The United States is responsible for one third of cotton that is traded and is the world’s leading exporter in this cash crop. Annually, the U.S. cotton industry profits around $25 billion, while providing over 200,000 jobs. U.S. cotton production is concentrated in the Southern U.S. as well as California. Depending on the climate, the cotton planting season can start as early as March, while the harvest can go well into December. The most popular type of cotton grown in the U.S. is called American Upland which accounts for 97% of all U.S. cotton crop grown every year.
Cotton #2 futures contracts are traded on the NYBOT while cotton futures contracts are traded on the NYMEX; both contracts have the same delivery dates.
Last updated May 2013
Cotton News Articles
- Indian cotton harvest forecast to be strong (11/1/2013) - Production of cotton in the world's second-largest grower is forecast to amount to record highs as a result of a strong monsoon season, according to the nation's textile commissioner.
- Cotton harvest set to slip as farmers opt for grains, organization says (3/21/2013) - This year is forecast to see decreases to the worldwide cotton harvest while farmers opt against planting the soft fiber and gravitate toward grains in its stead, according to the International Cotton Advisory Committee. Bloomberg reports for the 12-month period beginning August 1, farmers are poised to reap 22.56 million metric tons, which represents a... Read More.
- Cotton futures climb, emerge as top performing commodity thus far in 2013 (3/14/2013) - Increased Chinese demand pushed up cotton futures on Thursday as the soft fiber pushed to its top value in 10 months on commodity markets, according to Bloomberg. Shipments of cotton from the U.S. since the beginning of August of last year pushed to 6.77 million bales as of last Thursday, representing an increase from 5.59... Read More.
- Cotton futures climb as U.S. production slackens (3/5/2013) - Conjecture about increased global demand and slackening production pushed cotton futures to their highest prices in more than 10 months on Tuesday, according to Bloomberg. The Macquarie group stated in a report that farmers in the U.S., the globe's top exporter of the soft commodity, are set to sow 9.4 million acres of the fiber this... Read More.
- Global cotton harvests forecast to slip (2/12/2013) - Worldwide cotton farmers have cut down on the amount of the soft fiber they are planting, which is causing the largest drop in harvests in more than 20 years, according to Bloomberg. Demand for the soft commodity from China also is waning in lieu of imports that are of higher quality. The International Cotton Advisory... Read More.
- Cotton futures ride bullish trend (1/28/2013) - Reductions to a global surplus spurred sharp gains for cotton futures on Monday as the soft commodity marked an eighth day of gains during the past nine trading sessions, according to Bloomberg. Cotlook Ltd., which publishes a cotton index, said late last week that global supplies of the soft fiber will outpace demand by more... Read More.
- Cotton futures forecast to slip (12/3/2012) - Cotton futures are projected to slip in India due to sharp increases in production, according to the Times of India. A farm crisis in the subcontinent already has pulled down the price of the soft commodity and inventories are forecast to gain in January. That is likely to push cotton even lower, according to a... Read More.
- Ivory Coast aims to ramp up cotton production (11/7/2012) - Generation of cotton in a West African nation is set to increase as much as 47 percent during the next two years as compared to projections for this year, according to Bloomberg. By 2015, Ivory Coast farmers will be reaping a strong harvest of the soft fiber. The harvest ending in 2014 is forecast to... Read More.
- China grows cotton inventory (11/2/2012) - This season will see inventories of the globe's top importer of cotton surge to 9 million metric tons, which is forecast to be plenty of the soft commodity to compensate through 2018, according to the globe's largest cotton trading company, as cited by Bloomberg. Chinese inventories are growing as the nation's purchases also enhance domestic... Read More.
- Cotton prices drop from 5-month highs (10/19/2012) - U.S. cotton futures closed slightly lower during trading on Thursday, as the price of the commodity dropped from a five-month high as investors looked to cash in on a chance to maximize profits, Reuters reports. The price of cotton eased for the first time in five trading sessions, following concerns that a lack of quality... Read More.
- Market Spotlight: Soybean Meal (10/16/2012) - Soybean Meal is produced through processing and separating Soybeans into oil and meal components. By weight, Soybean Meal accounts for about 35% of the weight of raw Soybeans (at 13% moisture). If the Soybeans are of particularly good quality, then the processor can get more meal weight by including more hulls in the meal while still meeting the 48% protein minimum.