Re: I need to clear up ETFs
What do you base your assumption on that cotton is undervalued?
I think the cotton market is well supplied and a short-term stabalization or even a rally in the U.S. Dollar will cause commodity prices to drop. Currently there seems to be more down-ward pressure on cotton then there is up-side potential.
Normalized weather, as forecasted in the U.S. next year, will provide further downside pressures on cotton or at least severly limit the upside potential.
But maybe you have good contacts in the cotton pits that give you different indicators.
Corn and the ethanol for which it is used is clearly not the answer to solve the oil addiction problem.
Corn is actually among the worst commodities used for ethanol production and does more harm then good. It forced feed prices higher which led to an overall increase in food prices which fuel inflation and inflationary expectations.
Ethanol plants across the U.S. have shut down as it is not economically sensitive.
I also want to add that by your own reserach you said that more corn will be planted, that will force prices lower. Next year is expected to be a good crop season which will provide more downside pressure on corn and any upward movement in the U.S. Dollar will force prices lower as well.
It is very dangerous to bet on commodities if you don't fully understand the market and what moves prices. To assume that all commodties will rally due to gloabl growth is a very dangerous strategy as well.
Would I put my money on corn or cotton or would I advice investors to do so?
No, not at all.
Like I said maybe you have very good contacts in the industry which paint a bullish picture for those two commodities in particular.
Don't get me wrong, I don't want to discourage you from an investment in those two commodities, the above is just my personal opinion on it.
Last edited by Triton; 11-15-2007 at 08:43 AM.