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Cotton #2 1st Front Month  (CT*1)

83.27-0.15 (-0.18%) 9:28A EDT (ICEUS)
Commodity Price Quote as of Thursday, May 23rd, 2013 View Help

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 pounds (approximately 100 bales)
Tick Size 0.01 cents per pound ($5.00 per contract)
Daily Limit 3 - 7 cents ($1,500 - $3,500 per contract)
Trading Hours 8:00p.m. - 1:30p.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 ICE Futures U.S. (ICE) exchange. 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 ICE'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 in 2011 continued their parabolic rally into March 2011 and posted an all-time high of 227.00 cents a pound, the highest price since cotton began recorded-trading 140 years ago. Cotton prices then collapsed the remainder of the year and posted a 1-1/2 year low in December 2011 at 84.35 cents a pound, finishing the year down 36.6% at 91.80 cents a pound. Cotton prices plummeted as global production expanded and Chinese demand waned. The USDA in October raised its 2011 global production estimate to a record 124.19 million bales and hiked its global ending stocks estimate to a 3-year high of 54.83 million bales as Chinese cotton demand sank. Chinese cotton imports fell for seven consecutive months through August 2011 on a year-over-year basis, while Chinese cotton yarn exports fell for eleven of twelve months in 2011. The insatiable Chinese cotton demand in 2010 couldn't be repeated in 2011 as the global economy slowed, although overall 2011 Chinese cotton demand remained respectable with imports up 18.6% y/y to 3.36 MMT. Despite the worst drought in Texas in 100 years that reduced 2011 U.S. cotton production by -13.4% y/y to 15.67 million bales, increased output in India and Pakistan took up the slack and pushed the 2011/12 global stocks/use ratio to a 3-year high of 53.1%.

Supply - World cotton production in 2011-12 rose +5.9% yr/yr to 123.342 million bales (480 pounds per bale), a new record high. The world's largest cotton producers were China with 27.2% of world production in 2011-12, India with 21.9%, the U.S. with 12.7%, and Pakistan with 8.4%. World beginning stocks in 2011-12 rose +3.8% yr/yr below the record high of 62.480 million bales in 2007-08.

The U.S. cotton crop in 2011-12 fell by -13.4% yr/yr to 15.673 million bales, down from the 2005-06 record high of 23.890 million bales. U.S. farmers harvested 9.747 million acres of cotton in 2011-12, down -8.9% yr/yr. The U.S. cotton yield in 2011-12 fell -5.0% to 772 pounds per acre, not far behind the 2007-08 record high of 879 pounds per acre. The leading U.S. producing states of Upland cotton are Texas with 22.6% of U.S. production in 2011, Georgia (16.3%), California (8.4%), Arkansas (8.2%), Mississippi (7.8%), Tennessee (5.3%), Arizona (5.2%). 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 2010 fell -0.3% yr/yr to a record low of 1.316 billion square yards, less than one-fourth of the production level seen in 1950.

Demand - World consumption of cotton in 2011-12 fell by -4.5% yr/yr to 109.565 million bales, but still below the 2006-07 record high of 121.986. 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 2011-12 were China (40.2% of world total), India (17.8%), and Pakistan (9.4%). U.S. consumption of cotton by mills in 2011-12 fell -2.6% yr/yr to 3.800 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 2011-12 rose by +4.7% yr/yr to 37.415 million bales, but still below the 2005-06 record high of 44.854 million bales. The U.S. is the world's largest cotton exporter by far and accounts for 29.4% of world cotton exports. Key world cotton importers include Turkey with 6.7% of total world imports in 2011-12, Indonesia with 5.2%, Mexico with 2.7%, and Russia with 1.5%. U.S. cotton exports in 2010-11 (latest data) rose by +18.1% yr/yr to 14.783 million bales. The main destinations for U.S. exports in 2010-11 (latest data) were China (33.0%), Mexico (8.4%), Indonesia (6.1%), Thailand (4.8%), and Taiwan (2.4%).

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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