Market Overview: Cotton (CT)

Cotton is a worldwide crop grown in more than 75 countries throughout the world. The two largest producers of Cotton in the world today are the People's Republic of China and the United States. Other major Cotton producing countries are Russia, India, Brazil, Pakistan, Turkey, Egypt, Mexico and Australia.

Seasonal Overview:

Cotton prices, like those of other field crops, tend to move in concert with their production cycle. Preparation for planting and the planting effort are when the crop is most vulnerable to damage; hence the market begins to build a "risk premium" into the price of Cotton. As such, Cotton prices tend to rally from when fieldwork begins for planting in mid to late February, until the crop is pollinated. Pollination typically occurs in mid to late June, and with the squaring of the crop, the risk associated with development has diminished, and so do prices. Prices tend to decline from mid to late June until early October, when harvest begins. Cotton typically has a rally during harvest time on fear of planting delays, and the like. After harvest, prices tend to be quiet for the remainder of the year, and into the following year.

Cotton: (High: May-Jun//Low: Sep-Nov) Tax-related producer selling pressures market into FND for March contract. Increasing mill consumption and concern over planting, which begins in March, drive spring rally. With completion of planting in mid-June, market declines into harvest (September-December).

Chart courtesy of Moore Research Center, Inc.