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CTRM for Ags & Softs

Complex Agricultural Commodities
Complex agricultural commodities are those crops that possess unique physical qualities that require
specialized handling, grading or processing beyond those that are common to the dry grains and
beans sector.

Cotton
Overview
Cotton is a major agro-industrial crop
produced in both developing as well as
developed countries. It is one of the world’s
most important textile fibers, and it accounts
for more than half of all fibers used in
clothing and household furnishings. Cotton is
also used in industrial fabrics and products,
and
by-products
are
derived
from
cottonseeds and stalks for edible oils, soaps,
firewood, paper and high protein animal feed
supplements.
Cotton is produced in approximately 80
countries and serves as the economic
mainstay of many regions and nations. In
some countries, such as Mali, cotton
represents more than 50% of national export
income. Over 75% of world cotton production
occurs in developing countries, and the farmlevel value of world cotton production has
been estimated at USD 30 bn.
The tables show cotton production and
exports according to the USDA. India, China
and the USA are the largest producers, and
the USA and India the largest exporters. All
kinds of very detailed information about
cotton production and more can be found in
several locations on the Internet freely
available including the USDA but also at a number of industry association sites.

Cotton Trading
For more than a century, cotton industry representatives, traders and investors have been involved in the ICE Futures
U.S. (formerly “the New York Board of Trade (NYBOT)”) futures and options markets to engage in price discovery, price
risk management and price dissemination for cotton. ICE markets provide a benchmark price in cotton.To understand this
cotton futures market, a distinction must be made between physical (cash) cotton and cotton futures.
In the cotton cash market, participants buy and sell physical cotton of different grades and quality that will be delivered
immediately on a specified date. The cash transaction therefore involves the transfer of ownership of a specific lot of a
particular grade of physical cotton. Cash market contracts for later delivery of cotton, called forward contracts, should not
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