Cotton Jumps as India Cuts Exports

After two months of sideways action, the cotton market exploded upward this week. Prices jumped nearly 5 cents per pound (+6%), mostly on news last Monday that India would suspend cotton exports. India is the world's second-largest grower of the white fiber, second only to China. By halting exports, the Indian government has put a squeeze on global supplies and forced the international market to seek other sources.

The global market tightness is being made even worse as U.S. cotton growing regions along the Mississippi River are suffering from unusually dry conditions. Some analysts warn that prices could rise more in the coming year if the economy recovers, increasing demand for textiles and clothing. As of midday Friday, July cotton was trading at 86 cents per pound, more than double its 2008 low of only 37 cents/lb.

Platinum & Palladium

The metals markets recovered this week after experiencing a dramatic washout last Friday following the SEC filing against Goldman Sachs. Platinum and palladium both emerged especially strong, hitting 18-month highs at $1760 and $572 per ounce, respectively. These two metals are widely used for their chemical properties, especially in automobiles' catalytic convertors.

Recent economic optimism, strong auto sales, and "spillover support" from other metals like silver and gold have given power to platinum and palladium. The recent gains have spurred some trading bulls to set their sights on a new target for the metals: their all-time 2008 highs at $2300 and $595 per ounce.

Grains

Sunny weekend weather and a favorable planting forecast sent corn, wheat, and soybeans tumbling last Monday. The grains were down 15 cents, 21 cents, and 5 cents respectively. On Tuesday, updated forecasts of wetter short-term weather and rumors of a possibly drier summer allowed beans and wheat to erase all of Monday's losses. Concern for the bean crop focused on the weather phenomenon called "La Niña."

The last major La Niña occurred in 1988-89, when a drought in North America was estimated to have cost $40 billion in damage plus many lives. A stronger US dollar and near-ideal weather over Iowa kept corn prices contained throughout the rest of the week, trading at $3.53 per bushel Friday afternoon -- 9 cents lower on the week. As of Friday, May soybeans were trading at $9.99/bu and May wheat at $4.95/bu, reflecting weekly gains of 6 cents and 5 cents, respectively.

Alex Breitinger is a broker with Breitinger & Sons, LLC, a commodity futures brokerage firm in Valparaiso, IN and can be reached at 800-411-3888 or www.indianafutures.com.