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    Cotton #2 1st Front Month  (CT*1)

    73.62s-0.32 (-0.43%) 1:29P EST (ICEUS) View Help
    Commodity Price Quote as of Friday, May 25th, 2012

    Contract Specifications

    Symbol CT
    Name Cotton #2 (CT)
    Exchange ICEUS
    Trading Months March, May, July, October, December (H, K, N, V, Z)
    Trading Unit 50,000 lbs (approximately 100 bales)
    Tick Size 0.01 cent per lb ($5.00 per contract)
    Daily Limit 3 - 7 cents ($1,500 - $3,500 per contract)
    Trading Hours 20:00p.m. - 1:00p.m. CST
    Last Trading Day Seventeen business days from end of spot month
    Value of one futures unit $500
    Value of one options unit $500

    CRB Yearbook Description

    Cotton is a natural vegetable fiber that comes from small trees and shrubs of a genus belonging to the mallow family, one of which is the common American Upland cotton plant. Cotton has been used in India for at least the last 5,000 years and probably much longer, and was also used by the ancient Chinese, Egyptians, and North and South Americans. Cotton was one of the earliest crops grown by European settlers in the U.S.

    Cotton requires a long growing season, plenty of sunshine and water during the growing season, and then dry weather for harvesting. In the United States, the Cotton Belt stretches from northern Florida to North Carolina and westward to California. In the U.S., planting time varies from the beginning of February in Southern Texas to the beginning of June in the northern sections of the Cotton Belt. The flower bud of the plant blossoms and develops into an oval boll that splits open at maturity. At maturity, cotton is most vulnerable to damage from wind and rain. Approximately 95% of the cotton in the U.S. is now harvested mechanically with spindle-type pickers or strippers and then sent off to cotton gins for processing. There it is dried, cleaned, separated, and packed into bales.

    Cotton is used in a wide range of products from clothing to home furnishings to medical products. The value of cotton is determined according to the staple, grade, and character of each bale. Staple refers to short, medium, long, or extra-long fiber length, with medium staple accounting for about 70% of all U.S. cotton. Grade refers to the color, brightness, and amount of foreign matter and is established by the U.S. Department of Agriculture. Character refers to the fiber's diameter, strength, body, maturity (ratio of mature to immature fibers), uniformity, and smoothness. Cotton is the fifth leading cash crop in the U.S. and is one of the nation's principal agricultural exports. The weight of cotton is typically measured in terms of a "bale," which is deemed to equal 480 pounds.

    Cotton futures and options are traded on the New York Cotton Exchange, a division of the New York Board of Trade. Cotton futures are also traded on the Bolsa de Mercadorias & Futuros (BM&F). Cotton yarn futures are traded on the Central Japan Commodity Exchange (CCOM) and the Osaka Mercantile Exchange (OME). The New York Cotton Exchange's futures contract calls for the delivery of 50,000 pounds net weight (approximately 100 bales) of No. 2 cotton with a quality rating of Strict Low Middling and a staple length of 1-and-2/32 inch. Delivery points include Texas (Galveston and Houston), New Orleans, Memphis, and Greenville/Spartanburg in South Carolina.

    Prices - Cotton prices on the nearest-futures chart hit a 7-1/2 year low of 36.7 cents per pound in November 2008 due to the global financial crisis and expectations for a sharp drop in cotton demand due to the global recession. However, cotton prices in 2009 then staged a sharp rally during 2009 and early 2010, posting a new 2-year high of 83.3 cents in February 2010. That rally was sparked by a sharp 3-fold increase in Chinese demand for cotton due to the rebound in the Chinese economy and a much tighter supply situation for cotton. US cotton planting plunged during the summers of 2007 through 2009 due to competition for acres from corn and soybeans and due to generally weak global demand for cotton. The plunge in acreage resulted in very small US cotton crops of 12.82 million bales (-33% y/y) in 2008-09 and 12.40 million bales (-3% y/y) in 2009-10. Those small crops caused the US carry-over to drop sharply to a 14-year low of 3.30 million bales in 2009-10. On the world stage, global cotton production fell sharply in 2008-09 and 2009-10, thus causing world ending stocks to tighten to a 6-year low of 51.7 million metric tons in 2009-10.

    Supply - World cotton production in 2009-10 fell -4.4% yr/yr to 102.713 million bales (480 pounds per bale), farther below the record high of 121.953 million bales seen in 2006-07. The world's largest cotton producers were China with 31% of world production in 2009-10, India with 23%, the U.S. with 12%, and Pakistan with 10%. World beginning stocks in 2009-10 fell 2.0% yr/yr to a record high of 60.925 million bales.

    The U.S. cotton crop in 2009-10 fell by -3.2% yr/yr to 12.401 million bales, well down from the 2005-06 record high of 23.890 million bales. U.S. farmers harvested 7.691 million acres of cotton in 2009-10, up +1.6% yr/yr. The U.S. cotton yield in 2009-10 fell -4.8% to 774 pounds per acre, down from the 2007-08 record high of 879 pounds per acre. The leading U.S. producing states of Upland cotton are Texas with 43% of U.S. production in 2009, Georgia (16%), Arkansas (7%), North Carolina (7%), Missouri (5%), Mississippi (4%), and California (2%). U.S. production of cotton cloth has fallen sharply by almost half in the past decade due to the movement of the textile industry out of the U.S. to low-wage foreign countries. Specifically, U.S. production of cotton cloth in 2009 fell -21.3% yr/yr to a record low of 1.378 billion square yards, less than one-fourth of the production level seen in 1950.

    Demand - World consumption of cotton in 2009-10 rose by +3.1% yr/yr to 111.905 million bales, but still below the 2006-07 record high of 121.979. Consumption of cotton continues to move toward countries with low wages, where the raw cotton is utilized to produce textiles and other cotton products. The largest consumers of cotton in 2009-10 were China (40% of world total), India (17%), and Pakistan (11%). U.S. consumption of cotton by mills in 2008-09 (latest data) fell -4.5% yr/yr to 4.400 million bales, and accounted for 25% of U.S. production. The remaining 75% of U.S. cotton production went for exports.

    Trade - World exports of cotton in 2009-10 rose by +11.4% yr/yr to 33.661 million bales, but still below the 2005-06 record high of 44.584 million bales. The U.S. is the world's largest cotton exporter by far and accounts for 33% of world cotton exports. Key world cotton importers include Turkey with 10% of total world imports in 2009-10, Indonesia with 6%, Mexico with 4%, and Russia with 2%. U.S. cotton exports in 2007-08 (latest data) rose by +14.4% yr/yr to a new record high of 13.982 million bales. The main destinations for U.S. exports in 2007-08 were China (32%), Mexico (10%), Indonesia (9%), Taiwan (6%), and Thailand (3%).

    Articles from the Commodity Research Bureau (CRB) Commodity Yearbook. The single most comprehensive source of commodity and futures market information available, the Yearbook is the book of record of the Commodity Research Bureau, which is, in turn, the organization of record for the commodity industry itself. Its sources - reports from governments, private industries, and trade and industrial associations - are authoritative, and its historical scope is second to none. Additional information can be found at www.crbyearbook.com.
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