Light sweet crude oil May contract surged above $113. Near term oil will hit $120 a barrel and long-term $200 a barrel. Strong demand for oil coming from China (emerging markets), oil supply disruptions in Libya and the steady sinking value of the American dollar are the latest culprits for the recent up move. Oil peaked at $147 a barrel in the summer of 2008 prior to the Lehman collapse. What price per barrel is the demand destruction for oil?
The insatiable appetite for soy based products by the Chinese and Indians which account for over 2 billion people, roughly 1/3 of the world, will likely drive soybean prices significantly higher in 2011. The availability of soybeans may not be enough to meet the surging demand in Asia. Historically, soybean prices ascend to higher levels in late February to early March and stabilize during the summer season.
These days gold is getting all of the attention grabbing the headlines due to price levels reaching new record highs. Everywhere you go there are cash for gold signs offering to pay you cash for your gold. Wow… what a deal! Cotton hasn’t nearly received the same absorption as gold, silver and oil. Price levels for cotton today have not been seen since after the end of the American Civil War (1861-1865). Cotton prices have surged this year due to an increase in global demand, a strained supply and uncooperative weather. Analysts anticipate much higher retail prices for consumer apparel products next year.
For the equity investor, a cotton ETN exists. iPath DJ-UBS Cotton TR Sub-Idx ETN (BAL). Cotton futures are up 95% year to date and (BAL) is up 87% year to date. Before you deploy new capital into any investment do your due diligence and proceed with caution.