Cotton Futures Trading Basics

Cotton futures are standardized, exchange-traded contracts in which the contract buyer agrees to take delivery, from the seller, a specific quantity of cotton (eg. 50000 pounds) at a predetermined price on a future delivery date.

Cotton Futures Exchanges

You can trade Cotton futures at New York Mercantile Exchange (NYMEX).

NYMEX Cotton futures prices are quoted in dollars and cents per pound and are traded in lot sizes of 50000 pounds .

Exchange & Product NameSymbolContract SizeInitial Margin
NYMEX Cotton Futures
(Price Quotes)
TT50000 pounds
(Full Contract Spec)
USD 3,375 (approx. 15%)
(Latest Margin Info)

Cotton Futures Trading Basics

Consumers and producers of cotton can manage cotton price risk by purchasing and selling cotton futures. Cotton producers can employ a short hedge to lock in a selling price for the cotton they produce while businesses that require cotton can utilize a long hedge to secure a purchase price for the commodity they need.

Cotton futures are also traded by speculators who assume the price risk that hedgers try to avoid in return for a chance to profit from favorable cotton price movement. Speculators buy cotton futures when they believe that cotton prices will go up. Conversely, they will sell cotton futures when they think that cotton prices will fall.

Learn More About Cotton Futures & Options Trading

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