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It has not happened in a long time but the opportunity to sell cotton at a dollar a pound became a reality Monday as a combination of factors, but chiefly tight U.S. and world supplies, sent the futures market above the heady benchmark.
China crop smaller
China’s cotton crop is smaller than expected because of weather. Weather also hurt Pakistan cotton production as floods ravaged much of their cotton acreage.
“And there is still very strong concern with India’s government embargo.” That combination of factors, but primarily the tight U.S. and world stocks, Cleveland said, has pushed prices into the rarified air of $1 a pound.
Fund traders, because of the U.S. and world economies, are also back in the commodity markets. “Most commodities are up,” he said. “We see little resistance in the market. So we can just sit back and see what happens.”
He said if all the factors play out, cotton could hit $1.25. But farmers should take action now, he said, while they have profit opportunities.
Dollar cotton may offer a tempting target, but the old adage that no one ever went broke making a profit remains gospel.