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What are cotton futures?

Cotton futures are derivatives with cotton as the underlying asset. Photo: Tero Vesalainen / Shutterstock.com Improving sentiment amid lower output lifted the US cotton futures price over the past month as the market rebounded after hitting a near two-year low in October.

How much does a cotton futures contract cost?

A speculator enters into two short cotton futures contracts, when the futures price is $1.20 per pound. The contract entails the delivery of 50,000 pounds of cotton. The initial margin is $7,000 per contract and the maintenance margin is $5,250 per contract. The settlement price on the day of the transaction is $1.50 per pound.

What is the price limit for cotton futures?

Futures contracts are subject to a daily price limit that can range from 3 to 7 cents per pound. Please consult Rule 10.09 for details ( Click here for Cotton Rules.pdf) US Origin only. Galveston, TX, Houston, TX, Dallas/Ft. Worth, TX, Memphis, TN and Greenville/Spartanburg, SC.

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