Intercontinental Exchange (ICE), the leading global network of exchanges and clearing houses, announced that ICE Futures U.S. will launch a World Cotton contract on November 2, 2015.
The World Cotton contract will price delivery of multiple origins and allow delivery in multiple locations around the world. The new contract will trade alongside ICE’s benchmark Cotton No. 2 contract.
“The new contract is based on extensive conversations with our customers about the need for a broader price benchmark that reflects the global nature of today’s cotton markets,” said ICE Futures U.S. President Benjamin Jackson. “We have worked closely with cotton industry participants to design a contract that complements our Cotton No. 2 contract and enhances the ability for cotton growers and consumers to efficiently manage their pricing risk.”
Key details of the World Cotton futures contract include:
- First delivery month: May 2016
- Contract rules provide for delivery of cotton from the U.S., Australia, Brazil, India, Benin, Burkina Faso, Cameroon, Ivory Coast and Mali, with the U.S. as par and a pre-set premium or discount for each other origin
- The rules provide for delivery in exchange-licensed warehouses at specified delivery points in Malaysia, Taiwan, Australia and the U.S., with the Malaysia and Taiwan locations at par and with pre-set discounts for delivery in Australia and the U.S.
- The rules provide for a par quality of Middling color, Leaf 3 and Staple 36, with invoicing differentials for delivery of other allowed qualities
- Spread margins will be available with the ICE Cotton No. 2 contract
Additional information, including the origin, delivery location and quality differentials in place at the launch of trading, is available on the ICE website.
The World Cotton launch date is subject to regulatory review.
Source – Intercontinental Exchange