With all the news lately on Cotton, I thought I would share my thoughts. It has certainly been impressive as of late, but many of the big boys are starting to wonder if the higher prices could be starting to ration out some of the market's crazy export demand. The real fear though is that if prices do fall back, and the cheaper prices spark more sales we could have a run away train on our hands. Right now the USDA has our current ending stocks estimated at just under 2 million bales. This is our lowest ending stocks level in the past 50 years. If sales just simply return to the levels we saw this fall of between 400,000 to 500,000 bales, ending stocks could be at "zero" in a flash. Obviously the USDA does not want to see this happen so you have to believe any major price breaks will be meet with buy side support. Any bargain basement price break could be scooped up with one massive purchase by China and cause prices to surge even higher. With stocks this tight you can not afford to be short this market, regardless, it is just too dangerous. I would much rather see you "buy" the breaks, than trying to pick the "top" in this market.
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Pig crop neutral- New HIGHS June Hogs; New HIGHS Dec Cattle
Top 5 Trend of 2010 - High Commodity Prices