Emperical Study Of Hedging In China Cotton Future Market And Its Applications In Textile Companies

China has the largest cotton production, usage and trading volume inthe world. The cotton price fluctuated fiercely and dramatically in theyear2010/2011, which introduced a lot of uncertainties to textileindustries in China. How can we hedge the risks caused by the bigvotality of cotton price? Efficient use of cotton futures could not onlyminimize these risks but also provide new ideas for textile companies toenhance profit and speed up development. This essay did thoroughresearch on the main aspects which influences cotton price; collectedcotton price in spot&future market and studied the relations of these twoprice series by using econometric models like ADF unit root test,co-integration test etc. and provided practical and effective hedgingsuggestions to textile companies.