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Cotton reverses course and locks limit down, but BAL -9.6% underperforms as many piled into the...

Cotton reverses course and locks limit down, but BAL -9.6% underperforms as many piled into the ETF yesterday, anticipating perhaps a string of limit up moves. Sean Corrigan notes the move in cotton since last summer is a 10-sigma move, i.e. a 1/10^22 chance of occurring.
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Comments (4)
  • Stoploss
    , contributor
    Comments (1727) | Send Message
    Starting early with the BS today.. Sure is a lot of short contracts on cotton, though im sure it's just a 10 sig move, and NOT SHORTS, that is driving cotton down. Next up for 10 sig moves are: Silver, Cocoa, Crude oil, Palladium, and Coffee, in that order. Come on Sean, this happens twice a week. Get with the program.
    18 Feb 2011, 10:53 AM Reply Like
  • SA Editor Stephen Alpher
    , contributor
    Comments (549) | Send Message
    I don't think Corrigan is talking about today's move at all. He's talking about the move since last summer. You'll notice the chart is a mutli-decade one.
    18 Feb 2011, 10:57 AM Reply Like
  • Stoploss
    , contributor
    Comments (1727) | Send Message
    Understood, and looking back at July this began immediately after QE 2 was officially put on the table. Cottons reaction is a normal response to current policy and nothing more, along with the rest of the above mentioned commodities. There is no mention of Silver etc, which exhibit the exact same properties, and are to be dubbed 10 sig events as well? Or not?? The issue is not that cotton is high, but WHY is it so high? We know the (why) in 1861, but, we don't know the why now ? Would cotton be this high without the current policies? Silver? Gold?
    I think not. This is a pointless exercise to explain away a huge move in a commodity that is directly related to monetary policy. Nothing more, nothing less. Ben's futile attempts using shorts in the endless game of whack a mole to control prices is laughable.
    " Cotton is the highest it has been in over 100 years, due to monetary policy." That is all that needs to be said, i don't need a multi decade chart to understand that. With all due respect.
    18 Feb 2011, 11:47 AM Reply Like
  • Algodon64
    , contributor
    Comment (1) | Send Message
    Something that no one seems to focus on--unless you are in the cash cotton business--is the large number of "on call" sales that are still on the books. On call sales are sales that have been made--mostly to textile mills. The basis has been established but the final price has not been fixed. Obviously, textile mills only buy this way because they need the cotton but do not like the price. Hope springs eternal, but this year their their hope has mostly been delusional. There were nearly 1.2 million bales that mills waited to fix until the last week before FND in the March 11 contract. There are still 2.3 million unfixed in the May contract and 3.7 million in the July contract. The pain is not over with.
    26 Feb 2011, 12:34 PM Reply Like
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