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Another Look At Inflation: Cotton Up 44% YTD - One Percent Per Day

Tyler Durden's picture


Earlier, we got the January PPI number telling us that things are still somewhat under control on the inflationary front. Perhaps. Perhaps not. Cotton begs to differ. In a month and a half, cotton has risen 44%: since there have been about 44 days in 2011, that means about a 1% a day. Since our first warning back in September, when the world's most worn commodity passed $1, cotton is up 95%. Annualized, the YTD move in cotton is 1,512%. We are confident clothing makers and retailers have extensive hedges in place to counteract a move that will send margins negative shortly unless there is an appropriate hedge offset, or corresponding jump in prices. Either way, BTFD.


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Wed, 02/16/2011 - 10:15 | 966424 hedgeless_horseman
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Our parents survived double-digit inflation under Carter by wearing polyester.

Leisure suits, bitchezzz!!!

Wed, 02/16/2011 - 10:17 | 966437 SheepDog-One
SheepDog-One's picture

Polyester camo leisure suits! All the rage for late spring/early summer food riots and bank runs.

Wed, 02/16/2011 - 10:28 | 966476 Thomas
Thomas's picture

That's more disturbing than thinking about them having sex.

Wed, 02/16/2011 - 11:23 | 966616 Sudden Debt
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Wed, 02/16/2011 - 10:16 | 966430 NOPOMO
NOPOMO's picture

Ben says he does not see any inflation.  Boy if he gets one wiff of inflation he can shut it down in 15 minutes flat.

Ben is nothing but a fake and a liar.

Wed, 02/16/2011 - 10:59 | 966541 Agent P
Agent P's picture

In his defense (did I just say that?), "can" and "would" are two very different things.

Fun Fact: US paper currency is comprised of roughly 75% cotton...QE2 is getting more expensive by the day.

Wed, 02/16/2011 - 12:51 | 966955 h3m1ngw4y
h3m1ngw4y's picture

+14 trillion

Wed, 02/16/2011 - 10:16 | 966432 SheepDog-One
SheepDog-One's picture

Chocolate covered cotton balls anyone?

Wed, 02/16/2011 - 13:08 | 967053 robobbob
robobbob's picture

catch 22?

Wed, 02/16/2011 - 15:18 | 967642 SheepDog-One
SheepDog-One's picture

Wheres my parachute? Theyve all been confiscated, you get ONE share in 'the company' in its place!

Wed, 02/16/2011 - 10:18 | 966436 Misean
Misean's picture

A 1512% increase is good, right?

Wed, 02/16/2011 - 10:17 | 966438 jus_lite_reading
jus_lite_reading's picture

As I said, everyone wins. Every man, woman and child has a castle. That is Dr. Deficit's plan.

Wed, 02/16/2011 - 10:19 | 966440 Quintus
Quintus's picture

For the last time - There is no inflation!  Ben says so, and I'll believe him before I believe any of your stupid empirical facts.

Wed, 02/16/2011 - 10:21 | 966451 SheepDog-One
SheepDog-One's picture

Theres no other woman in bed with me sweetie, after all who are you going to believe your lyin eyes or ME?

Wed, 02/16/2011 - 10:19 | 966443 unwashedmass
unwashedmass's picture


um, excuse me guys, but, um...there is NO inflation.

Wed, 02/16/2011 - 10:20 | 966446 Jason T
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America made a deal with the devil allowing the printing of money.

Wed, 02/16/2011 - 10:33 | 966491 LawsofPhysics
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slight modification;  America made a deal with the devil by allowing a private banking cartel to print their money for them.

Wed, 02/16/2011 - 12:53 | 966970 h3m1ngw4y
h3m1ngw4y's picture

sometimes the devil of my devil is also my devil O_o

Wed, 02/16/2011 - 14:07 | 967355 faustian bargain
faustian bargain's picture

My ears are burning

Wed, 02/16/2011 - 15:02 | 967573 hedgeless_horseman
hedgeless_horseman's picture

Are your boots heavy?

Jonathan Moulton 18th century Brigadier General of the New Hampshire Militia, alleged to have sold his soul to the devil to have his boots filled with gold coins when hung by the fireplace every month.

Wed, 02/16/2011 - 10:23 | 966447 hambone
hambone's picture

FYI - largest sportswear companies have no hedges in place...just reeling margins.  Co-worker and I were just discussing this...price increases coming daily on materials, labor, rubber, leather, you name it.  Ouch.

Wed, 02/16/2011 - 10:21 | 966449 youngman
youngman's picture

Why has there not been any companies coming out and saying margins are their forcasts...this stock bubble is about to pop I think.  Any guesses on how many companies MISS expectations next quarter????  I am thinking 80%.  If they are not passing on these costs..and they say they aren´t....then it has to hit somewhere.....

Wed, 02/16/2011 - 11:19 | 966600 lincolnsteffens
lincolnsteffens's picture

No, no, no! L. Birinyi just on Boomberg said we have two more years to go for this BULL market. Made predictions for the market with confidence.  I know he is right because in two years I know what I'll be eating for lunch on Feb. 16th 2013 and how much I'll weigh to the oz. SMART GUY!!!!! I'm putting all my money on Citi, not.

Wed, 02/16/2011 - 12:03 | 966776 topcallingtroll
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productivity is likely to be extraordinary.  80 percent miss is a doomsday scenario.

Wed, 02/16/2011 - 10:21 | 966455 monopoly
monopoly's picture

But flat panel TVs are down in price again. Don't we buy at least one of those every week. Much more important than food, oil, clothes. come on guys, BTFD>



Wed, 02/16/2011 - 10:22 | 966457 Shameful
Shameful's picture

So summer fashions will be light on material?

Do you patriotic duty to fight inflation and go nude?  Topless Fridays at the office?

Wed, 02/16/2011 - 10:23 | 966459 topcallingtroll
topcallingtroll's picture

Omg as a kid I remember polyester leisure suits! The.shirts often had a printed scene on them such as a panorama. Please dont bring those back! Next thing you know will be the gold plated neck chains for guys ( guys wear chains, not necklaces). We will also have to dig out the blow dryers and part our hair in the middle and feather it. Dear god, noooo!

Wed, 02/16/2011 - 20:11 | 968485 StychoKiller
StychoKiller's picture

Already got 10 grams of 24kt around my neck -- you?

Wed, 02/16/2011 - 10:28 | 966474 ElvisDog
ElvisDog's picture

I am the world's biggest doofus. I invested in the one commodity - natural gas - that has not gone up in the recent commodity boomfest. Who would have thought cotton would be the speculator's darling?

Wed, 02/16/2011 - 10:31 | 966481 Thomas
Thomas's picture

Hang tough, Elvis. You are early, not wrong. I have a very chunky natural gas position and am totally sanguine that I have simply beat the street to the target.

Wed, 02/16/2011 - 10:33 | 966488 youngman
youngman's picture

I agree with are early....

Wed, 02/16/2011 - 12:01 | 966768 topcallingtroll
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you guys give me hope!

Wed, 02/16/2011 - 10:37 | 966498 LawsofPhysics
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Hey, don't feel bad.  My wife convinced me to only grow 14 acres of cotton last summer.  We did well, but could have done better.

Wed, 02/16/2011 - 12:00 | 966765 topcallingtroll
topcallingtroll's picture

Yeah I got in at 5.47 or something like that.  UNG has been great for me the last couple of times i bought at 5.60 or below.  I am hanging on though.  I think we got one more round in this game.  Margin just makes it more exciting.  asshole pucker factor beginning to diminish a bit.  Riding the storm out.

Wed, 02/16/2011 - 10:29 | 966480 The Alarmist
The Alarmist's picture

Gee, looks like cotton is getting to the price where it no longer makes sense to be so capital-intensive in its production, especially with so much spare labor capacity idle.  Time to bring back the plantation.


Wed, 02/16/2011 - 10:51 | 966529 antisoshal
antisoshal's picture

America heavily subsidizes its cotton industry, and we are the largest exporter. Perhaps maybe we should cut the subsidy and just enjoy the inflow of cash for one of the few crops we produce that appears to now be worth the effort?

Wed, 02/16/2011 - 15:42 | 967713 painequalschange
painequalschange's picture


For everything we export...

And here's the kicker -

We should only accept GOLD in return!

Wed, 02/16/2011 - 11:01 | 966546 ivana
ivana's picture

looks like emerging markets consumers decided to double wearing shirts, panties , coats etc since july 2010 ... hahaha

wherever whichever "globalized" market starts lack of liquidity, volume etc ... when humans buy side dissapears >> utility puppeteers are stepping in and hiking it to the moon.

same game as S&P but in that case they are only cautiously "bullish"

Wed, 02/16/2011 - 11:01 | 966549 Sizzurp
Sizzurp's picture

Isn't the dollar itself made from cotton.  Hmmm this might be more serious than I thought.

Wed, 02/16/2011 - 11:06 | 966559 Overflow-admin
Overflow-admin's picture

TD, be careful with the maths:

44% in 44 days doesn't mean +1% per day. With +1% per day incremental you have around +53% in 44 days. +0.8% per day sounds better.



Wed, 02/16/2011 - 11:47 | 966721 SheepDog-One
SheepDog-One's picture

Actually your math is off worse, TRADING days not total days, so actually its up well over 1% per trading day.

Wed, 02/16/2011 - 11:14 | 966579 Sausagemaker
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Could it be increased demand for new underwear because Uncle Ben has everyone shitting their pants?

Wed, 02/16/2011 - 11:45 | 966706 lincolnsteffens
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precious! This site is better than Sat. Night Live.

Wed, 02/16/2011 - 11:15 | 966589 sawyer
sawyer's picture

This cotton market will crash and burn by the spring...

1. too much hoarding by suppliers in China, India, and Pakistan

2. unlike other soft or grain commodities, cotton quality can decline over time, thus reducing value

3. retailers will lower ordered quantities as they know their clients have a set budget to spend on cloths. For sure "for the home" retailers will suffer the most as raw material represents a higher percentage of good's cost 

Wed, 02/16/2011 - 12:16 | 966815 LawsofPhysics
LawsofPhysics's picture

Who cares, I sold my crop and made great money, let them hoard.  People still need to eat so we plant a different set of crops.

Wed, 02/16/2011 - 11:24 | 966621 bob_dabolina
bob_dabolina's picture

Well there have only been 34 trading days so cotton is really up 44% in 34 days.

Wed, 02/16/2011 - 11:26 | 966637 gwar5
gwar5's picture

I think I bought everything I need already, still thinking... more Socks?


Wed, 02/16/2011 - 11:51 | 966732 ivana
ivana's picture

i did same. doubled socks. socks are important due to global sweating and care for family member noses.
now only have to wear all of it as less as possible. right now naked 68%... wait wait will also rest my hat down to make it round 90% naked

Wed, 02/16/2011 - 11:57 | 966757 topcallingtroll
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Pics please?

Wed, 02/16/2011 - 11:54 | 966744 lincolnsteffens
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I got in early and filled the drawer last year with major socks investment. If you hurry you can probably still pick up jeans at a big discount at all the discount stores. Forget the business suits 'cause you wont need 'em. 

You have to get in early on this stuff! I'm waiting for lumber and labor to crash before putting an addition on my house or chucking the whole thing and scour N. Zealand for big discounts to start sprouting when the carry traders are forced to cash out.

Wed, 02/16/2011 - 12:43 | 966921 The Axe
The Axe's picture

Long socks,,,,,PLEASE cotton is like OJ (not the the killer) but orange juice! When prices go crazy you can sub in cherry or apple or many other choices until prices retreat . Cotton is being horded and cotton does breakdown after being stored to long..When all these dopes start selling the buyers will move out of the determine the really market price....not this crazy shit.....

Wed, 02/16/2011 - 12:51 | 966960 99er
Wed, 02/16/2011 - 13:27 | 967161 Goldbugger
Goldbugger's picture

Hey There's no inflation. It's beningn like the tumor on bernanke's a$$.

Wed, 02/16/2011 - 14:11 | 967372 wawawiwaa
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You short this on April 15 your will be minting money...

Wed, 02/16/2011 - 17:13 | 967993 The Axe
The Axe's picture

Not inflation   worlds greatest short squezze..  check out forward months....

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