Basis Trends in U.S. Cotton Futures

This study examines the behavior of the basis of ICE cotton futures over the last several years.  Basis patterns differ between contracts with different points of maturity during the year; patterns have been changing over time, and are also affected by events specific to particular crop years.  Understanding basis behavior is crucial for producers and consumers of cotton as they confront marketing decisions.  This study establishes the typical trends and shocks exhibited by cotton futures basis since 2003, and develops preliminary hypotheses regarding possible future trends.