An Overview Of The Cotton Industry
The largest producers and consumers of cotton are China and India. China doesn’t export as much cotton as other leading producers because demand in their country is so high and they also stock a sizable amount old orchard of cotton.
The U.S. is the third largest cotton producer, but also the largest exporter of cotton. This is due to production efficiencies that give the U.S. an advantage over smaller growers (in places like Africa). In the southern U.S., cotton will tend to battle with soybeans for growing space. Because the two commodities grow in similar conditions, the price of soybeans can mean that more or less cotton is grown in the following months when soybean prices rise or fall dramatically.
Cotton is typically used in the creation of clothing and home furnishings. Cotton starts by being picked, then brought to textile mills, which manufacture the cotton into the aforementioned clothing/furnishings.
Cotton is typically planted in April/May and the first few weeks of it’s growth, are critical in ensuring a healthy crop. The highest prices paid for cotton futures occur between March-July (which is during the cotton’s most vulnerable time as a plant). The lowest prices typically occur between September and November.
Where Can I Find Cotton Future News?
There is a publication called ‘The Weekly Cotton Review’ published every week by the USDA. The report summarizes all of the information the USDA has on cotton, which includes the export sales, crop conditions, weather, world prices, and more. It can be found here (LINK: www.fas.usda.gov/data/cotton-world-markets-and-trade).
Cotton Futures Specs
Cotton (/CT) Specs:
Contract Size (leverage) - 50,000 lbs
Current Price - $1.105 *
Notional Value -$55,250 * = ($1.105 x50,000)
Tick Size - $0.01 ($5.00/tick)
Strategies: N/A
Products Discussed In This Episode: /CT
*Values subject to change based on where the market is at
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