Thursday screencast: cotton mouth

abnormalreturns
February 17th, 2011

Parabolic moves don’t come around that often. When they do they can leave your mouth agape. Cotton is undergoing a move like that having reached historic highs. The price of cotton is nearly double average levels seen over the past three decades. These kinds of price moves set off a whole series of events. Farmers now have to make decisions about how much cotton (corn, soybeans, etc.) they should plant this season. Apparel makers have to decide whether to shift away from from cotton or pass on prices hikes to reluctant consumers. In today’s screencast we look at the implications of the cotton price spike.

Items mentioned in the above screencast:

Cotton tops $2 a pound. (Bloomberg)

Farmers have some planting decisions to make. (WSJ)

Just how unusual are cotton prices? (Twitter)

Apparel makers have some decisions to make. (The Reformed Broker, FT Alphaville)

Daily price chart of cotton futures. (Finviz)

Daily price chart of the iPath Dow Jones-AIG Cotton Total Return ETN (BAL). (StockCharts)

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Tickers: BAL