Cotton is an industrial fibre competing with polyester, so its demand follows textile manufacturing and consumer spending rather than food. Supply is led by China, India, the US and Brazil, and US export sales data is a weekly market mover.
The contract has an unusual delivery mechanism involving certificated stocks and quality differentials by staple length, micronaire and strength, which makes the deliverable-grade specification more complex than in the grains.
Example: cotton at 72 cents is $0.72 x 50,000 = $36,000 per contract. A 3-cent daily limit move is $1,500. A mill hedging 500,000 pounds of annual consumption uses 10 contracts.
Related: coffee-futures, sugar-futures, ice-exchange, deliverable-grade, long-hedge