Cotton Futures Hit 2009 Low – Weekly Commodities Review

Cotton Futures Hit 2009 Low – Weekly Commodities Review

Cotton Futures Hit 2009 Low

Cotton futures slumped to a 2009 low on bearish supply/demand news. Cotton’s projected world stocks-to-use ratio hit their highest mark since 2004-2005.

We were stopped out of our position at $0.45, and this one hurt – I hate the idea of selling cotton at these prices – BUT, we always have to respect our stops, no matter how strong the desire to get some of these losses back.

Cotton has been dropping about $0.01 after going “limit down” $0.03 earlier in the week.

Next support for cotton appears to be at $0.41 – we’ll continue to watch cotton and see if it retests it’s old lows.

Looks like cotton may continue to circle the bowl until demand is able to stage some sort of recovery. I still believe we’ll see $1 cotton sooner rather than later, as soon as these stimulus packages begin to take hold. All of this newly printed money will be looking for a home.

Coffee’s Rocky Week

Coffee did not fare much better this week. We are holding on to our position right now, with a stop around the 113 mark.

We discussed coffee’s long term supply/demand situation last week. We’ll soon see if our timing on this trade was appropriate.

Gold Stocks Starting to Catch Some Air

The rally in gold, and gold stocks, continues to look very strong.

Gold set a 100-day high on February 12th at 954.0, and closed Friday at 942.2. While the barbaric relic may be due for a pullback, the chart undoubtedly goes from the “lower left to the upper right”, as Dennis Gartman is fond of saying.

Even with gold rallying, gold stocks are following, but somewhat reluctantly. The Gamco Gold fund, where my wife’s entire 401K resides, has doubled off its October lows, but is still about 30% below its highs from last spring.

I recently read that last spring’s valuation on gold stocks really had $1100 or $1200 priced into them, which may explain why we’re not back to that point, even with gold rallying to where it is.

It’s also possible that gold stocks are a fantastic bargain right now, and are poised to start doing moonshots when gold takes off. Chris Mayer, my favorite Agora analyst, expects gold stocks to make all-time highs in 2009, partly thanks to lower input costs that will fuel (no pun intended) record earnings.

For more information on gold and gold stocks, I’d recommend checking out some of the articles written by Casey Research and Big Gold editors on our blog, such as this one.

Open positions

Date Position Qty Month/Yr Contract Entry Price Last Price Profit/Loss
01/16/09 Long 1 MAR 09 Corn 374 3/4 363 1/2 ($562.50)
01/20/09 Long 1 MAR 09 Corn 397 1/2 363 1/2 ($1,700.00)
02/06/09 Long 1 MAY 09 Coffee ‘C’ 121.95 114.75 ($2,700.00)
Net Profit/Loss On Open Positions ($4,962.50)

Account Balances

Current Cash Balance $36,354.04
Open Trade Equity ($4,962.50)
Total Equity $31,391.54
Long Option Value $0.00
Short Option Value $0.00
Net Liquidating Value $31,391.54

Cashed out: $20,000.00
Total value: $51,391.54
Weekly return: -17.1% 🙁
2009 YTD return: -38.2% 🙁

Prior year’s results:
2008: -8%
2007: 175%
2006: 60%
2005: 805%

Initial stake: $2,000.00

(Had to add these historical facts in to keep me from smashing my head into my keyboard).

***”Cash out” mostly means taxes, living expenses, and startup capital for our time management software company that was recently covered by the Sacramento Business Journal and Inc magazine.