Throughout the late 19th and 20th centuries a number of cotton futures exchanges have been in operation in both developing and developed countries. The New York Cotton Exchange is the longest running exchange with continuous operation for more than 130 years. This paper examines the conditions under which these exchanges were developed as well as the reasons they ceased to operate [.arrowhorizex] ranging from lack of interest by hedgers and speculators to outright government prohibition. The paper also discusses a number of new initiatives that are under way and assesses the probability that at least one of them will become a successful operation.

The views expressed here are the sole responsibility of the authors and do not reflect the views of the World Bank or the European Investment Bank. Most of the research was carried out while Ioannis Kaltsas was with the International Cotton Advisory Committee. We would like to thank Michael Corbin for excellent research assistance; Gershon Feder, Donald Mitchell, Garry Pursell, and Hans Timmer for comments on an earlier draft; Christophe Baranicka, Benoît Blarel, Ray Butler, Mario DaSilva, Ji Ding, Severin Kodderitzsch, Susan Lai, Olivier Matringe, Mary Ann Ogasawara, Selda Sehirlioglu, Dina Umali-Deininger, Panos Varangis, Jan Wellmann, and Xiao Yang for providing important information.