ICE cotton futures (also called Cotton No. 2 Futures) are a type of futures contract that allows investors to speculate on the future price of cotton. The contract is traded on the Intercontinental Exchange (ICE), and the price is quoted in US cents per pound.
The cotton market is subject to a number of factors that can affect the price of the commodity. These include weather conditions, global production levels, and demand from the textile industry.
In the past, the ICE cotton futures contract has been widely used by speculators as a way to hedge against adverse price movements in the cotton market. However, the contract has also been used by producers and consumers of cotton as a way to lock in prices for future deliveries.
The ICE cotton futures contract is a physically deliverable contract. This means that if you hold a contract until it expires, you are obligated to take delivery of the underlying commodity (in this case, cotton).
Delivery of the cotton is made at a designated delivery location, and the contract specifies the quality of the cotton that must be delivered. The delivery process is managed by the ICE, and all participants in the contract are required to post margin with the exchange.
The ICE cotton futures contract is a relatively new contract, having been introduced in 2006. It is one of the few futures contracts that is traded exclusively on the ICE.
The contract is popular with speculators and hedgers alike, and its physical delivery nature makes it a useful tool for those who want to take a position in the cotton market without having to take delivery of the commodity.