Commodity Fundamentals: How to Trade the Precious Metals, Energy, Grain, and Tropical Commodity Markets

CHAPTER 18

Cotton

OVERVIEW

The oldest use of cotton currently known was in the Americas. Pieces of cotton cloth and bits of cotton bolls found in caves in Mexico suggest that the use of cotton dates back at least 7,000 years. By 3,000 BCE people in the Indus River Valley of Pakistan were raising and weaving cotton into cloth. Egyptians made and used cotton cloth during this period as well.

Cotton came to Europe around 800 CE with Arab merchants and by 1500 was known and used throughout most of the world. It is thought that cotton was first planted in the United States in Florida in 1556 and in Virginia in 1607. While colonists continued to grow cotton in the United States, it was not until the invention of the cotton gin in 1703 and, in England, the spinning machine in 1730 that cotton growing became an international industry.

Some three centuries later, cotton has become the leading cash crop for the United States and the most-used fiber in the world. In the United States alone, annual revenue from cotton exceeds $120 billion.

No part of the cotton plant is left unused. The seeds are crushed for oil, which is used in cooking and food production. The leftover meal and hulls from the plant are used as fertilizer and in animal and fish food. And cotton growers plow the plant's stalk and leaves back into the ground to enrich the soil.

Like sugar and other tropical commodities, cotton grows in warm climates, primarily in the southern United States, Uzbekistan, China, and India. The ...