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Cotton Trading Manual
Edited by Terry Townsend, International Cotton Advisory Committee
- comprehensive reference to the complex international cotton market
- discusses the history of the cotton trade
- assesses the global picture, looking at trends and production and consumption analysis
Cotton Trading Manual (CTM) is the first work to provide a comprehensive reference source to the conduct of the complex international cotton market. CTM begins by looking at the history of the cotton trade, and then moves on to assess the current global picture, including a discussion of trends in the market, as well as production and consumption analysis. The third and fourth parts focus on trading in physical cotton and futures respectively. Finally, the last section deals with administrative and management issues within the cotton trade as a whole, such as contracts, insurance and risk management. CTM is an indispensable practical companion for all those involved with trading in this commodity.
ISBN 1 85573 439 7
ISBN-13: 978 1 85573 439 5
October 2005
510 pages 247 x 174mm looseleaf
£615.00 / US$1045.00 / €770.00
Usually dispatched within 24 hours
About the editor
Cotton Trading Manual is edited by the Secretariat of The International Cotton Advisory Committee (ICAC). Formed in 1939, the ICAC is an association of 41 governments sharing an interest in the production of and trade in cotton. Based in Washington DC, the organisation promotes greater cooperation between governments. Its Secretariat supports this work by publishing research on the cotton trade and trends in cotton prices.
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Contents
PART 1 THE COTTON TRADE: HISTORY AND BACKGROUND
PART 2 THE GLOBAL PICTURE
PART 3 THE PHYSICAL TRADE
PART 4 DERIVATIVES
PART 5 ADMINISTRATION AND MANAGEMENT
PART 6 APPENDICES
PART 1 THE COTTON TRADE: HISTORY AND BACKGROUND
History of the cotton trade from origin to the History of the cotton trade from origin to the twentieth century
John Baffes
- Early history
- Competition between cotton and wool and the emergence of the West
- Rise of the United States and the dominance of England
- Globalisation
- Statistical Appendices
The cotton trade today
Paul A Ruh
- Trends in the world’s fibre consumption
- The international cotton trade
- What are cotton merchants?
- What is the added value cotton merchants provide?
- Information gathering
- Forecasting cotton prices
- Pricing of cotton
- Hedging and the New York futures market
- E-trade
- Positions
- Summary
PART 2 THE GLOBAL PICTURE
The cotton environment: macro issues
Secretariat of the international Cotton Advisory Committee
- The economic importance of cotton
- Markets forces drive prices lower
- Competing crops
- Competing fibres
- Government policies affecting cotton
- Environmental issues
Trends in the world cotton market
Stephen MacDonald and Carol Skelly
- Fundamental trends and structural change: The growing openness of world trade; Rise and fall of government control in developing countries; What does the future hold?
- The dominance of the United States: Diversity of US cotton production; Organisation of US cotton market; The US cotton retail market and mill use of cotton; Evolution of US cotton farm program from the mid-1980s; Key US cotton farm program provisions, 2002–2007; Trade policies and agreements affecting cotton; US export dominance of the world cotton market
- Importance of China (Mainland): Structure and history of China’s cotton industry; Disposal of stocks in the reform period; China’s entry into the World Trade Organisation
- Role of Australia, West Africa and Central Asia
- Conclusion
Cotton agronomy and production
Fred Gillham
- Background: Cultivated cottons of the world; Areas of production; The cotton plant
- Cotton improvement
- Cotton agronomy: Crop establishment; Plant nutrients
- Plant growth regulators: Control of vegetative growth; Harvest aid chemicals
- Irrigation practices
- Crop protection
- Harvesting and initial processing: Hand picking; Mechanical picking; Primary processing
- By-products
- Ecological considerations
- National programmes to limit/control cotton production vs yield as a potential ceiling on cotton production
Cotton consumption
Cotton Incorporated
- Cotton cultivation and consumption over the years
- Components of cotton consumption: Raw cotton consumption: factors and trends; End-user consumption
- Current advances and promising technology
- Promotion efforts around the world
- Summary
PART 3 THE PHYSICAL TRADE
Cotton as an industrial raw material
Dean Ethridge
- Major uses of cotton
- Major determinants of cotton’s market value: Fundamental requirements for spinning staple fibres; Impacts of spinning technology on fibre requirements; Additional fibre property measurements needed; Compensating technology
- Blending cotton with other fibres
- Conclusion
Cotton quality
Anton Schenek
- Physical characteristics and properties of cotton: Introduction to cotton quality; Properties of cotton; Product quality versus fibre quality; Cotton fibre quality demands for classing and HVI measurements; Fibre quality demands for future classing and selected measurements; Additional cotton fibre quality problems; Selected traditional laboratory tests
- Varieties and types of cotton: Cotton producing countries and regions; Cotton varieties; Cotton breeding and resultant changes of quality parameters; Description of cotton types
- Impact of production and ginning conditions on quality: Cotton production impact on quality; Cotton ginning impact on cotton quality
- Contamination: Fabrics; Strings; Organic matter; Inorganic matter; Oily substances/chemicals; Stickiness; Seed coat fragments
- Classing and grading: Classing and grading principles; Typical classing systems of selected cotton producing countries; HVI – classing
Cotton pricing
Don Ethridge, Darren Hudson and Sukant Misra
- Factors affecting cotton prices: Market fundamentals; Cotton pricing policies; Quality
- Cotton pricing arrangements: Impact of quality management; Types of arrangements
- Sources of price information and price predictions: Current price data; Historical data
- Summary and conclusions
PART 4 DERIVATIVES
The New York Cotton Exchange
Ted Davis
- The history of a universal commodity: Characteristics of raw cotton fibre; Political and technological influences; The creation of cotton futures exchanges; Futures contracts
- The Cotton Futures Exchange: The Certificate System; The clearing house; Development of the NYCE
- The current cotton contract and futures market: The Cotton No 2 Futures Contract; Hedging
- Conclusion
Cotton futures and options as hedging tools
Herman S Kohlmeyer Jr
- Origins of trading
- Why hedge?
- Options
- Who hedges?
- Merchants; Mills; Farmers
- Summary
Over-the-counter derivatives
Nigel Scott
- Features of the global cotton markets and their impact on OTC derivatives: Supply – can be unreliable; Quality – can be unreliable; Market risk – can also lead to credit risk
- A typical risk management problem in raw cotton: Greek Box 4 cotton purchased from a Greek ginner by a merchant
- How OTC instruments work in practice: Hedging with cotton swaps; Cotton swaps dissected; Cotton options
- OTC and exchange-traded instruments compared: Historical development of exchange-traded and OTC markets; Exchange-traded or OTC? Cross-currency swaps and options; Term structure extension
- Potential difficulties with OTC instruments: Liquidity; Credit; Contrarian risk
- Postscript: risk management using OTC instruments in the developing world
Technical trading
H Rogers Varner Jr
- Combining technical and fundamental aspects
- Candlestick theory: Stars; Counts to new highs and lows
- Traditional methods: Five point signal; The cowboy wiggle; Gann; Elliott; Volume and open interest
- The open
- Reasonable risk or trip to the casino? Much left out
- Conclusion
PART 5 ADMINISTRATION AND MANAGEMENT
Cotton controlling
Peter Wakefield
- Sampling: Pre-shipment; Post-landed
- Classing
- Weighing: Pre-shipment; Landed; Tare
- Surveys: Pre-shipment; Exterior damage to bales; Mixed pack bales; Foreign matter
- Who appoints the controller?
- Where are the controllers located?
- Conclusion
Freight and insurance
Peter Hirschfeld
- Freight: Terms and definitions; The container trade; Container terms and definitions; Bills of lading; Freight rates
- Insurance: LCA trade rules: clauses applicable to insurance; Contingency insurance
Payments and documents
Peter Hirschfeld
- Terms and definitions
- Letters of credit: Confirmed letter of credit; Shipping document; Weights
Taxation and accounting
Peter Hirschfeld
- Taxation
- Accounting
- Finance
- Risk management
Contracts and arbitration
Secretariat of the international Cotton Advisory Committee
- Cotton sales contracts
- Sanctity of contracts
- Gerneral principles of arbitration
- Arbitration in cotton trade
- Quality disputes and technical disputes
- Awards
- Appeal
- Enforcement of judgments
- Defaults and sanctions
PART 6 APPENDICES
Appendix 1: Pricing and price risk management: glossary
Secretariat of the international Cotton Advisory Committee
Appendix 2: International cotton organisations and associations
Secretariat of the international Cotton Advisory Committee
Appendix 3: Cotton trading organisations
Secretariat of the international Cotton Advisory Committee
Appendix 4: The rise and fall of cotton futures exchanges
John Baffes
Appendix 5: Conversion factors
Secretariat of the international Cotton Advisory Committee
Appendix 5: The increasing role of cotton exchanges in China
Secretariat of the International Cotton Advisory Committee
Appendix 6: Cotton promotion
Brooke Lewis
Appendix 7: The enforceability of arbitration awards
Neil P Gillen
Appendix 8: World cotton supply and use
Secretariat of the International Cotton Advisory Committee
Appendix 9: Conversion factors
Secretariat of the International Cotton Advisory Committee