Thursday, August 11, 2016

Cotton could be worth a Buy

Cotton prices have plunged on the news that China will extend its sales of cotton from its reserves through the end of September. China has been selling cotton from its reserves for the past several months as demand from its cotton spinners for supplies to meet the demand for cloth have increased materially. 

This time, however, China has increased the amount of cotton it will released, previously stating that it was going to allow for 1.7 million tonnes of cotton to be sold from the reserve but now increasing that to 2.0 million tonnes. We have been waiting for this announcement to finally step up to buy cotton and with prices plunging today we’ll do exactly that. 

Those who cannot trade futures should avail themselves of the cotton ETF, BAL, listed on the NYSE. However, be certain to put in limit orders, not market orders. 

Not an investment recommendation. Positions may change at any time.