With cotton making up 35% of global textile fibres, its resilience and dye retention drive its demand. For traders, the tick size—the minimum price movement in trading—is ₹10, enabling precise adjustments and strategies when dealing with fluctuating cotton market prices.
Introduction
Cotton is a soft, fluffy staple fibre that grows in the bolls, or seed capsules, of cotton plants. This versatile plant thrives in tropical and subtropical regions across the globe, including countries like Egypt, India, Africa, and the Americas. Mexico is home to the greatest variety of wild cotton, followed closely by Australia and Africa.
As of 2033, global cotton production is predicted to reach about 29 million metric tonnes annually. Currently, cotton occupies 2.5% of the world’s arable land. China is the largest producer of cotton, though the majority of its yield is used domestically. In contrast, the United States is the leading exporter of cotton worldwide, supplying significant amounts to global markets. Cotton’s widespread cultivation and usage make it a vital component of the textile industry.
Factors that Impact the Cotton Price
Here are some key factors that impact cotton market prices:
- Domestic Demand and Supply: The balance between domestic demand and supply significantly impacts cotton prices. When demand exceeds supply, prices tend to rise, and vice versa.
- Inter-Crop Price Parity: The price relationship between cotton and alternative crops influences farmers' planting decisions, impacting cotton's supply and market prices.
- Cost of Production: The expenses associated with growing cotton, including labour, seeds, and fertilisers, directly affect market prices.
- International Price Trends: Due to the interconnected nature of global markets, global cotton prices and trade policies significantly impact domestic prices.
- Weather and Crop Risks: Weather conditions, pests, and diseases play a crucial role in cotton production, affecting yields and, consequently, market prices.
- Cotton Yarn Prices: There is a strong correlation (over 90%) between cotton yarn prices and India's raw cotton prices, impacting overall market trends.
- Global Trade: Approximately 30% of global cotton fibre production is traded alongside its byproducts, such as yarn, fabric, and clothing, influencing market dynamics.
Things to Consider Before Trading in Cotton
Before diving into cotton trading, it's essential to consider several key factors to ensure informed decision-making:
- Market Volatility: Cotton prices are subject to fluctuations driven by global demand, geopolitical events, and currency exchange rates. Understanding these dynamics is essential for predicting price trends and making well-informed trading choices.
- Regulatory Landscape: Government policies, including trade tariffs, environmental regulations, and subsidies, significantly impact the cotton market. Staying updated on current and forthcoming regulations is important for anticipating shifts in market conditions.
- Economic Indicators: It is vital to monitor economic indicators such as global GDP growth, industrial output, and agricultural productivity, as these metrics strongly influence cotton demand. Changes in these indicators can provide early signals of price movements.
- Investor Sentiment and Speculation: Investor sentiment and speculative activity also influence the cotton market. Understanding market psychology and the effects of speculative trading is key to managing risk and effectively timing trades.
Cotton Expiry Date Calendar 2024
Contract launch calendar for cotton for the year 2024
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Contract Launch Month
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Contract Expiry Month
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June 2024
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November 2024
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June 2024
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January 2025
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September 2024
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March 2025
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November 2024
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May 2025
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January 2025
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July 2025
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March 2025
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September 2025
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May 2025
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November 2025
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May 2025
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January 2026
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September 2025
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March 2026
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November 2025
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May 2026
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January 2026
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July 2026
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March 2026
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September 2026
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How to Trade in Cotton via Angel One?
To trade cotton via Angel One, follow these steps:
- Open a Demat and Trading Account: Start by opening a Demat and Trading Account with Angel One.
- Activate the Commodity Segment: Once your Demat account is set up for trading, make sure to activate the commodity segment to start trading in cotton contracts and other commodities.
- Stay Informed: Monitor live cotton prices, market movements, and news that could impact the market by following exchanges like MCX (Multi Commodity Exchange) and NCDEX (National Commodity and Derivatives Exchange).
- Execute Your Trades: Use the Angel One trading platform to place your trades according to your strategy.
- Implement Risk Management: Protect your trades by using risk management tools such as stop-loss orders to minimise potential losses.
