On an average, cotton futures traded lower week-over-week for the week ended June 23, 2017. These contracts refer to the cotton No. 2 futures traded on the Intercontinental Exchange (or ICE) and call for the physical delivery of cotton that meets certain minimum standards of grades and length.
On June 23, the near-month cotton futures closed 2% higher week-over-week at 73.0 cents per pound compared to 71.9 cents per pound on June 16. On an average, these futures fell 2% week-over-week to an average of 71.6 cents per pound in the week ended June 23.
The forward curve for cotton futures has a negative slope compared to current futures prices. This means that the current market participants (BAL) are willing to pay a higher price for cotton in the near term as opposed to future months.
This shift may occur if the market anticipates lower production of cotton, which may negatively impact cotton producers. Any scarcity affecting cotton futures could lead to an increase in price, which may be higher than the current levels.
Companies such as Monsanto (MON) and Syngenta (SYT) sell cotton seeds and related crop protection products. Dow Chemical (DOW) and DuPont (DD) are other major companies that also sell crop protection products.