By admin       2018-05-18

Cotton can be one of the most volatile commodities that trade on the U.S. futures exchanges. Cotton is an agricultural product, and it is a member of the soft commodities sector of the asset class. In March 2011, the price of the fluffy fiber rose to an all-time high at $2.27 per pound as a shortage resulted in a rally that took the price from 76.83 cents in July 2010 to the March peak. Before October 2010, the price of cotton never traded above the $1.1720 per pound level which was the 1995 high. On the downside, in 2001, cotton fell to a low of 28.20 cents. After the 2011 peak, the price declined to lows of 55.66 cents in March 2016, but it has been making higher lows and higher highs since the lows that occurred just over two years ago. In 2016, cotton made it to over 70 cents, and in 2017 the high was north of 80 cents per pound. Recently, the cotton futures markets put in another higher high, and we could see a challenge of the 90 cents level later this year. Like all agricultural commodities, cotton output is a function of weather conditions in the areas of the world where climate supports its production. The leading producers of the fiber in the world are China, India, and the United States. At the same time, economic conditions around the world impact the demand side of the fundamental equation for cotton, and this year the tariffs issue could distort the price path of the commodity. There is a myriad of issues facing the cotton market this year, but the path of least resistance remains higher based on the trading pattern since March 2016.

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