Cotton Futures and Cotton Options
Market
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Free Cotton Futures E Guide
Dear clients and students of the commodity markets, the
following information should answer all of your questions about cotton futures
and options. You may also call 800-915-4716 or email
tkfutures@earthlink.net your cotton future
questions to be answered by a seasoned professional.
The History of Cotton and Cotton Futures Trading
These 126-year-old contracts call for 50,000 lbs. of
cotton. Cotton future contracts are only rivaled by corn contracts
that began trading about the same time in Chicago
that cotton was trading in New York. Although
cotton's economic role has diminished over the last
century, it is still an extremely important
commodity in today's economic picture.
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China
has led the world in cotton production for years.
During the cold war between the USA and The Soviet
Union, the Soviets invested huge amounts of capital
to make one of the largest producers of cotton in
the world. Uzbekistan is the world's second leading exporter
of cotton.
Government reporting for third world producers lacks
for cotton as well as other softs, but for some countries, such as India and
Pakistan, university extension services provide quality statistics.
Cotton has
the ability to grow anywhere that has ample soil moisture and at least 200 frost
free days per year. Droughts and competition with other crops for land can cause
extreme volatility in cotton futures prices.
While China exports extremely little compared to
other exporters, its demand role is huge and
influences cotton futures prices. China's
stocks also underline the country's significance.
These again are approaching half of world stocks of
cotton and increases in demand from China can cause cotton futures prices to
move dramatically.
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cotton option data or click here now open an account and begin trading cotton futures
or cotton options today.
The United States is a large consumer of cotton. Use
has trended higher due to consumers' favor for
cotton clothing. Textiles have a thin profit margin.
It's made worse by competition from man-made fibers,
such as polyester and rayon which are far cheaper
than cotton. Recent increases in petroleum prices have once again made cotton
competitive because the man made fibers are usually petroleum based. Cotton
futures prices are sometimes affected by oil prices.
About two
thirds of the harvested crop is composed of the
seed, which is crushed to separate its three
products–oil, meal and hulls. Cottonseed oil is a
common component of many food items, used primarily
as a cooking oil, shortening and salad dressing. The
oil is used extensively in the preparation of such
snack foods as crackers, cookies and chips. The meal
and hulls are used as livestock, poultry and fish
feed and as fertilizer.
When is U.S. cotton planted?
Planting
begins as early as Feb. 1 in South Texas and as late
as June 1 in northern areas of the Cotton Belt.
When is U.S. cotton harvested?
Harvesting
of the crop typically begins in July in South Texas
and extends to late November in more northern
climates
Where is cotton grown in the U.S.?
Ninety-eight percent of the cotton is grown in:
Alabama, Arkansas, Arizona, California, Georgia,
Louisiana, Mississippi, Missouri, New Mexico, North
Carolina, Oklahoma, South Carolina, Tennessee and
Texas. The remaining 2 percent is grown in Kansas,
Florida and Virginia.
Who are the largest global
producers of cotton?
China, USA and India produce roughly 80% of
the global supply of cotton. Uzbekistan is the world's largest exporter of
cotton.
Cotton
and U.S. Currency
According to the Bureau of Engraving and Printing,
US paper currency is made up of 75% cotton and 25%
linen. In other words, there are .75 of a pound
of cotton in each pound of dollar bills. Most people erroneously believe that
the currency is made up of paper from tree fibers.
Cotton futures and cotton options contracts
trading has gained quite a lot of volume over the last few years as more people
learn about how cotton futures along with other futures contracts have a place
in many aggressive investors' portfolios.
Cotton No. 2 Futures Contract Specifications
Cotton Futures
Trading Unit -
50,000 lbs. net weight (approximately 100 bales).
Trading Hours -
10:30 pm to 2:15pm NY time.
Price Quotation -
Cents and hundredths of cent per pound
Trading Months -
Current month plus one or more of the next
twenty-three succeeding months. Active trading
months: March, May, July, October, December.
Ticker Symbol -
CT
Minimum Fluctuation -
1/100 of a cent (one "point") per pound below 95
cents per pound. 5/100 of a cent (or five "points")
per pound at prices of 95 cents per pound on higher.
Spreads may always trade and be quoted in one point
increments, regardless of price levels.
Last Trading Day -
Seventeen business days from end of spot month.
First Notice Day -
Five business days from end of preceding month.
Daily Price Limit -
3
cents above or below previous day's settlement
price. However, if any contract months settle at or
above $1.10 per pound, all contract months will
trade with 4 cent price limits. Should no month
settle at or above $1.10 per pound, price limits
stay (or revert) to 3 cents per pound. Spot month -
no limit on or after first notice day.
Point Value -
$5.00
Delivery Points -
Galveston, TX; Houston, TX; New Orleans, LA;
Memphis, TN; Greenville/Spartanburg, S.C.
Cotton Options
Trading Unit -
One New York Board of Trade Cotton No. 2 Futures
Contract
Price Quotation -
Prices quoted in cents and hundredths of a cent
Trading Months -
March, May, July, October and December. The nearest
ten delivery months will be available for trading.
Ticker Symbol -
CT
Minimum Fluctuation -
Prices quoted in cents and hundredths of a cent
Last Trading Day -
The last Friday which proceeds first notice day for
the underlying future by at least five business days
Expiration Date/Time -
Until 5:00 p.m (New York time) on any trading day
including last trading day. Automatic exercise at
one tick or more in-the-money at expiration on last
trading day.
Daily Price Limits -
None
Strike Price Increments -
1
cent increments
Minimum Price Fluctuation -
1/100 of a cent
Point Value -
$5.00
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