Trading CFDs on Cotton
Cotton is one of the key essential raw materials for the global textile industry, also known as “white gold.” Cotton is used for its creation of cotton fabric. It is typically the most popular material for clothing and bed linens all around the globe. The top five countries that produce most of the cotton include Brazil, and China, India, USA, Pakistan. India and China would be the world’s largest manufacturers of cotton. On average china and India produce 23 million and 27 million bails respectively.
When global economies are growing at a healthy pace, commodities like cotton perform very well specifically, in countries with the emerging market. Because of the higher growth rate, they will probably experience massive requirements for cotton and cotton clothing. Cotton No.2 contract has been traded at the Intercontinental Exchange (ICE) and is the global benchmark for its cotton trading community. The contract calls for delivery of cotton of certain grade standard and staple length. Wheat futures prices are expressed in US dollars 100lbs (1CFD contract 100lbs, 1 lot contains 1000 of 100-lbs equivalent cotton bales) Instrument – Cotton
Currency – USA
Spread – $0.05 over market
Margin – 3.00%
Trading hours (GMT) – 2: 00- 19:19
What influences the price of Cotton?
The demand for cotton in the global market supports the fluctuating price of cotton. The demand for cotton has been rising for decades, with the vast majority of the increasing demand coming from emerging markets. It also acts as If reserve banks increase the production of money, the purchasing of the underlying currency (i.e., the dollar, euro, and pound) declines. But, due to the limited number of natural resources, a product such as cotton may retain its value.
Climate change can have a huge impact on the supply of cotton. Any impact of climate change is very likely to contribute to prices as the yields will be impacted by any shift in the weather; for example, Periods of drought could cause prices to rise dramatically.
With the advancement of technology, there is a high risk to the cotton of been replaced by a better substitute, which is more economical and easy to produce, for example, polyester.
Advantages of trading Cotton CFD with Capital Street FX
As most of the traders speculate on the price movement and won’t need cotton in physical form. This is why the most useful instrument for traders in the contract for difference (CFD). This allows traders to buy or sell without owning the underlying instrument. It also gives freedom to trade a particular market from either side, i.e., and a trader can go long or short according to his strategy. CFD is a very cost-efficient instrument. The brokerage on CFDs is very low.
Why trade Cotton CFD with CAPITAL STREET
- BROAD RANGE OF MARKETS- Access to the popular commodities markets, including energy, metal, and agricultural products.
- CSFX offers you our stat of the art platforms and range of trading tools
- Trade using Margin- Get greater exposure to the marketplace with a small deposit and spread your capital using margin.
- Automate your trade facilities and direct access to the market
Safety of funds