The GCA Insider
by Kevin Kerr
| Date: 02/13/09 | Estimated Update: 02/20/09 |
|---|---|
| Company: | Futures Press, Inc. |
| Phone: | 1-800-963-1561 |
| Website: |
www.kerralert.com  |
Cotton - This soft staple fiber from the bolls of the cotton plant has been cultivated since about 3000 BC in the Indus Valley - part of modern-day India and Pakistan - and as early as 5000 years ago in the Americas. Ancient cultures spun cotton to make fine garments and textiles. Wild, uncultivated cotton has been found in Australia, Africa, Arizona, Central America, California, Brazil, and Mexico - and through breeding and selection, wild cotton plants were developed into the processing-friendly varieties grown today.
Contract Size - 50,000 pounds
Price Quote & Tick Size - Cents and hundredths of a cent per pound; minimum fluctuation is 1/100 of a cent per pound = $5.00 per contract
Contract Months -March, May, July, October, December
Trading Specs - Futures and options trade electronically only on the Intercontinental Exchange 0230 to 1445 ET.
Daily Price Limit
3 cents above or below previous day's settlement price. Limit is subject to expansion in certain circumstances
Trading Symbols - CT
Cotton Facts
Commercially grown cotton is normally one of five varieties; Egyptian,
Sea Island, American Pima, Asiatic, or Upland. In the United
States, the "cotton belt" growing region includes Alabama, Arizona,
Arkansas, California, Georgia, Louisiana, Mississippi, Missouri, North
Carolina, Oklahoma, South Carolina, Tennessee, Texas and Virginia.
A cotton crop needs a long frost-free period, a lot of sunshine, and
moderate rainfall - it normally takes around 150 days from planting to
harvest. Most dry tropic and sub-tropic areas across the globe can
produce cotton.
Cotton bolls are processed usually by use of a cotton gin (short for engine), which separates the lint from the seeds. Cotton is normally classified according to the fiber length, or staple. The fiber is compressed into bales which the cotton industry has dictated standards for. Each bale is 55 inches tall, 28 inches wide and 21 inches thick.
The following charts show the top countries in production, imports, and exports of cotton.
***table data courtesy of USDA/NASS
***table data courtesy of USDA/NASS
***table data courtesy of USDA/NASS
The following graph shows the overall production of cotton in the US since 1960, the earliest year for which the USDA has available data:
***data provided by USDA
Key Uses
Cotton is a valuable source of fiber, and the obvious end-use for the crop is as a textile. However, cottonseed oil is also an important and valuable product. After the seeds are de-hulled, the meat of the seed is pressed to extract the valuable oil. Leftover meats and hulls are sold as livestock feed and the refined oil is used in foods, cosmetics, rubber, soaps, and even explosives.
Key Concerns
Like most agricultural products, cotton depends on a delicate balance of ideal weather and irrigation. In addition, concerns for cotton may include the following:
Pests and Disease - Cotton crops require a high volume of pesticides and insecticides. One of the most destructive pests in North America is the boll weevil, responsible for devastating the cotton industry in the 1920s. The boll weevil feeds on immature cotton bolls; females can lay about 200 eggs in less than two weeks, and the larvae, in turn, will feed on flower buds. Diseases include various types of root rot, boll rot, rust, and mildew.
Competition - Since the end of the nineteenth century, the manufacture of synthetic fibers or alternative cellulose fibers has caused direct competition with cotton. The introduction of polyester and nylon caused hardship on cotton exporting economies and began a battle to re-establish markets for cotton in the late 1960s.
Fair Trade - Since cotton is grown throughout the world, some farmers in developing nations have difficulty competing with developed nations; and in 2002, Brazil took issue with the United States regarding subsidies paid to US cotton producers. Aside from issues with subsidies, many countries are criticized for employing child labor or exposing workers to dangerous pesticides - issues which have pushed forward the "ethical fashion" movements.
Disclaimer: There is risk of loss in all commodities trading. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some option strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Futures Press Inc., the publisher, and/or its affiliates, staff or anyone associated with Futures Press, Inc. or www.kerralert.com, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise). Past results are by no means indicative of potential future returns. Options DO NOT necessarily move lock step with the underlying futures contract. Information provided is compiled by sources believed to be reliable. Futures Press, Inc., and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of Futures Press, Inc.
