Greyson S. Colvin submits:Cotton prices are at record levels, near $1.70 per pound as supplies are at their lowest levels since 1993. We expect prices will continue to appreciate in the first half of 2011 as there is not enough cotton to go around and the deficit in supplies will continue to widen due to reduced production estimates.
Why hasn't inflation caught up with a monetary-induced boom in China?
One might argue that China's policy of keeping the renminbi cheap amounts to an export subsidy that has been an important factor fueling its growth. But that thesis is puzzling to economists who reason that a cheap-currency policy can only get you so far. Paul Krugman explains:
By CommodityHQ: Cotton, the fluffy commodity, was one of the most talked about investments of 2010. With a number of factors combining, cotton prices spiked to historic highs last year and led to a number of investors jumping in on the trend, only to get burned when cotton tanked midway through 2011. Global consumption for this year was expected to surge, but unfortunately, the expected 120 million tons of cotton use was revised down to 113 million after issues in China and Pakistan led to lower demand.
Money Morning submits: By Don Miller Reacting to a potential squeeze that threatens to drive up cotton prices, the biggest cotton-futures exchange took measures last week to prevent speculators from taking big positions.
Two years ago China amassed half the global supply of Cotton with huge price supports in an effort to encourage more cotton production. China "succeeded".Farmers produced, and the state paid more for cotton than farmers could get elsewhere. Worldwide supplies soared, but the cotton was withheld from the market. China's Cotton Policy "Success" Story
Investment U submits:
By Tony D'Altorio
Cotton prices have surged beyond $2 a pound, the highest level they’ve ever hit. The fiber didn’t even go that high during the Civil War’s cotton embargo.It is now up 170% since a year ago, and more than 40% since the beginning of 2011. Short-term squeezes have definitely contributed, as mills scramble to buy futures contracts to fix physical supply prices. But there are solid fundamentals to blame as well.
Today’s AM fix was USD 1,360.00, EUR 1,015.38 and GBP 867.29 per ounce. Yesterday’s AM fix was USD 1,365.75, EUR 1,020.28 and GBP 871.29 per ounce. Gold rose $4.70 or 0.34% yesterday, closing at $1,371.30/oz. Silver fell $0.16 or nearly 0.69%, closing at $23. Platinum rose $11.94 or .8% to $1,514.24/oz, while palladium was down $2.57 or .3% to $744.93/oz.
By Matt Schilling:On Friday, China had fulfilled its intention to release a portion of the cotton it had held in its state-based reserves. Many analysts believe the move could potentially create a shift in the global markets in which the fiber is traded.
As inflation spreads across the developing world, household needs could soon be more expensive for American consumers too. Commodity prices -- from oil to steel to cotton -- are rising across the globe. While that's already being felt at U.S. gas stations, it'll soon be putting pressure on the prices Americans pay for food, appliances and clothing. Prices are rising far more rapidly in developing economies than in the United States.