Thanks Hraban,
That should be fine, I've tried to increase the margins as well, but not sure that's the issue as I can perfectly place text with \inmargin directly, just not with the numbercommand.
MWE:
\starttext
\setuplayout[margin=2cm, leftmargin=2cm, rightmargin=2cm]
\showframe
\showlayout
\setupcaption[figure][location={rightmargin}]
\startplacefigure[title=Cow] \externalfigure[cow] \stopplacefigure
\define[1]\MyFormulaNumber{\inleftmargin{#1}}
\setupformula[numbercommand=\MyFormulaNumber]
\inleftmargin{Left Margin Text}
\inrightmargin{Right Margin Text}
\startplaceformula[reference=eq1] \startformula c^2 = a^2 + b^2 \stopformula \stopplaceformula
\stoptext
Adam