Cotton — Commitment of Traders

Cotton futures trade on the ICE exchange in 50,000-pound contracts and represent the benchmark for raw fibre used in textile production globally. COT positioning in cotton is driven by the interplay between US export competitiveness (dependent on the dollar), global textile demand (particularly from China, Bangladesh, and Vietnam), and US crop weather. Speculative funds use cotton as a proxy for EM consumer demand growth: when China is growing strongly and import demand is high, spec longs build; during demand slowdowns or US-China trade friction, they liquidate. Commercial hedgers include cotton merchants (Olam, Louis Dreyfus), textile mills, and US cotton growers. The COT Index for cotton is a useful indicator around the seasonal planting and harvest cycle: spec longs tend to build on US drought fears in spring and summer, then face liquidation pressure once crop conditions are confirmed. Weekly changes in the COT net position for cotton track closely with USDA export sales data and the weekly crop condition report.