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ICE Cotton Margin Hike Backfires, Sends Cotton To All Time Record High

Tyler Durden's picture





 

Earlier, the ICE once again engaged in the now traditional margin hike of any surging commodity in an attempt to force longs to sell out of speculative margin positions. Only a funny thing happened as a result: instead of killing the price, the price of cotton surged to $1.935, the highest price ever, as apparently those impacted were on the short side, inciting a short covering spree. A retest of the $2 psychological price barrier is now guaranteed and is on next week's docket. But don't worry, a 100% price jump in the key ingredient of clothing in 6 months will not have a margin impact for consumer discretionary companies. None at all. Sarcasm aside, what the take home message here is that exchange margin hikes no longer have an even short-term adverse impact, and in fact are accelerating price gains to the upside.

And the ICE's failed attempt at temporary price controls (link)

h/t pino

 


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Fri, 02/11/2011 - 10:45 | Link to Comment jus_lite_reading
jus_lite_reading's picture

The main point is, the more they try to manipulate the free markets, the more damage they do. Period. That is why the game is over.

Stock up on supplies and ammo now.

Fri, 02/11/2011 - 10:48 | Link to Comment SheepDog-One
SheepDog-One's picture

No question...the tighter they squeeze the more oozes out of control...someone stop these madcap central planner idiots!

Got the supplies and ammo covered, saw this not going well at all long ago.

Fri, 02/11/2011 - 10:52 | Link to Comment jus_lite_reading
jus_lite_reading's picture

We hope the sheeple wake up before that occurs.

Fri, 02/11/2011 - 13:30 | Link to Comment Rusty Shorts
Rusty Shorts's picture

 - everybody together now...

 

Jump down

Turn around

Pick a bale of cotton

Jump down

Turn around

Pick a bale of cotton

...

 

Fri, 02/11/2011 - 20:36 | Link to Comment StychoKiller
StychoKiller's picture

"The more you tighten your grip, the more star systems will slip through your fingers." -- Princess Leia

Fri, 02/11/2011 - 11:16 | Link to Comment financeguru500
financeguru500's picture

You are correct. In a real free market, the rich wouldn't have been allowed to accrue over 50% of the nation's wealth while 40% of the nation has less than 1% of the wealth. The market would have corrected itself a long time ago.

Fri, 02/11/2011 - 11:20 | Link to Comment whatsinaname
whatsinaname's picture

I hope BB wears silk underwears and not cotton 'cause he's going to need a lot of them in the next few months and years to come !!

Fri, 02/11/2011 - 12:18 | Link to Comment ElvisDog
ElvisDog's picture

Hmmm, have to disagree with your statement. In a free market, the rich have competitive advantages (e.g. Warren Buffett) that lets them accumulate more wealth. That being said, what we have in the world now is more like organized crime where the system of corruption is designed to have wealth flow to the wise guys.

Fri, 02/11/2011 - 14:12 | Link to Comment Azannoth
Azannoth's picture

Wealth flows according to Ideology not merit

Fri, 02/11/2011 - 10:47 | Link to Comment -Michelle-
-Michelle-'s picture

I went to Joann Fabric a few nights ago for a sewing class.  The instructor spent a good ten minutes advising us to stock up on cotton prints while we can because "the days of $3.99/$4.99/$5.99 cotton are gone."  She also said that while we'll be paying $8 or $9 a yard for cotton, we'll be "seeing through it."

Out of a class of four, I was the only one who didn't look shocked.

Fri, 02/11/2011 - 10:49 | Link to Comment SheepDog-One
SheepDog-One's picture

Already stocked up on a bunch of Carhart jeans and shirts, boots, socks, all of it. 

Fri, 02/11/2011 - 10:58 | Link to Comment -Michelle-
-Michelle-'s picture

I've been bookmarking patterns for kids' clothing created from mens' t-shirts and button-downs.  There's a pretty big movement out there for repurposing old clothing already.  I imagine it's only going to get bigger.

 

Fri, 02/11/2011 - 11:38 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

Same here including Red Wing boots and socks, Levis, LL Bean flannel shirts, etc, and surprise, a few of the items are still made in USA.

Buy some clothing that real work can be performed while wearing...without the clothing coming apart the first time it's stressed.

Fri, 02/11/2011 - 10:49 | Link to Comment Testicular Cancer
Testicular Cancer's picture

I am waiting for the day this happens to gold & silver.

Fri, 02/11/2011 - 10:49 | Link to Comment pazmaker
pazmaker's picture

I find most my clothes at Goodwill and Salvation Army...Price have remained the same so far.. $4.00 for a dress shirt  $8.00 for pants and jeans!

Fri, 02/11/2011 - 11:43 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

I buy used Levis jeans, and other brands, at local flea markets for .50 up to $2. Most are barely used.

I buy in sizes 30 - 38. These are great barter material...and real work can be accomplished while wearing them. 

 

Fri, 02/11/2011 - 11:52 | Link to Comment Zero Govt
Zero Govt's picture

i've over 200 t-shirts in my collection, think this cotton spike makes me a millionaire!!!

Fri, 02/11/2011 - 12:41 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

I have more than 150 Harley Ts from various dealerships and as many from biker bars and...even some that make no statement. lol

Fri, 02/11/2011 - 13:16 | Link to Comment Rusty Shorts
Rusty Shorts's picture

I've got to get back to West Africa, they've got all of our vintage T-Shirts !!

http://www.viceland.com/int/v16n11/htdocs/liberian-girls-and-boys-234.php

 

 - check out the "Click Here for more T-Shirts" on above link.

Fri, 02/11/2011 - 10:50 | Link to Comment whatz that smell
whatz that smell's picture

time to go commando, bitchez.

Fri, 02/11/2011 - 13:11 | Link to Comment The Limerick King
The Limerick King's picture

Looks like you've answered your own question....

Fri, 02/11/2011 - 10:50 | Link to Comment Lone Mad Minute...
Lone Mad Minute Medic's picture

When will they ever learn?

 7th infantry, Cotton Balelers. Who Rah!

Fri, 02/11/2011 - 10:50 | Link to Comment Ancona
Ancona's picture

Bring it on!!

We don't need no stinkin T-shirts no more!

We'll all just go naked.

Fri, 02/11/2011 - 10:56 | Link to Comment Dapper Dan
Dapper Dan's picture

Chris Lee out of NY is formally on board with it.

Fri, 02/11/2011 - 10:50 | Link to Comment jus_lite_reading
jus_lite_reading's picture

And wheat continues its steady climb up... anyone see the article about the general strike in Israel over the 134% increase in the price of drinking water and 10% increase last year in the price of bread? 10% may seem insignificant, but two things to take note of- that price increase occurred before wheat jumped 70% and that increase represents a staple over the long term. Houston, we have early hyperinflation. Global War is imminent. The EU crumbles first, and furious.

Fri, 02/11/2011 - 14:03 | Link to Comment topcallingtroll
topcallingtroll's picture

Any bad news for Israel is good news for me.  I've hated those fuckers ever since they decided to make Pollard a national hero.

Fri, 02/11/2011 - 10:51 | Link to Comment Sudden Debt
Sudden Debt's picture

 

SO WHEN DOES MY OLD UNDERWAIR BECOME MORE VALUABLE THEN GOLD???!!

 

Fri, 02/11/2011 - 11:29 | Link to Comment whatz that smell
whatz that smell's picture

catchy depression-era twist: Olde UnderWair!

...according to Moody's, per OU, an ES peg and an expert-networked pump and dump IPO on eBay followed by a crack-up boom crash will ignite the animal spirits and is guaranteed a price target of Dow 36,000 resulting in a sure 22 bagger.

oh yeah. don't forget to leverage the derivatives.

Fri, 02/11/2011 - 11:03 | Link to Comment Hephasteus
Hephasteus's picture

When you change your name to Trisky and set up a porn site that the SEC discovers.

Fri, 02/11/2011 - 11:18 | Link to Comment WALLST8MY8BALL
WALLST8MY8BALL's picture

Remember - you cant eat underwear, well with one exception....

Fri, 02/11/2011 - 11:56 | Link to Comment Rodent Freikorps
Rodent Freikorps's picture

Gold underwear would be Mynxy.

http://www.youtube.com/watch?v=5WcjJFTpeoI

 

Fri, 02/11/2011 - 10:50 | Link to Comment wherewasi
wherewasi's picture

 

http://news.yahoo.com/s/ap/20110209/ap_on_re_us/us_shale_oil_3

 

I'm never sure whether good news is really good or not.  When does the other shoe drop etc?  Could it be that something positive is happening here?  Or will the EPA police stick a knife in it?

Fri, 02/11/2011 - 11:08 | Link to Comment Cocomaan
Cocomaan's picture

In Pennsylvania we're well acquainted with "fracking", or hydraulic fracturing. 

The results for people living nearby are something else:

http://www.youtube.com/watch?v=wwogQWLEqW8&NR=1

Fri, 02/11/2011 - 12:14 | Link to Comment Mad Max
Mad Max's picture

Detailed info on the Bakken shale:

http://www.theoildrum.com/node/3868

Note the potential net recoverables.  1% of a decent resource is, well 1%.  Not exactly the savior of happy motoring.

But I'm sure that the EPA and "liberals" will get blamed anyway, just like Exxon stole the "fish carburetor" and silenced its inventor, etc.

Fri, 02/11/2011 - 10:51 | Link to Comment SheepDog-One
SheepDog-One's picture

Up $10 from yesterdays low? March out the central planners for firing squad!

Fri, 02/11/2011 - 10:51 | Link to Comment Lone Mad Minute...
Lone Mad Minute Medic's picture

Go Cammo! Blend in... Take em from the inside. BAL

Fri, 02/11/2011 - 10:52 | Link to Comment Vint Slugs
Vint Slugs's picture

The ICE margin increase for cotton is nothing out of the ordinary when a market shows increased volatility - be it upside, downside or sideways.  The exchange's behavior mirrors that of all other exchanges.  Please go back and look at what occurred during the 1970s commodities cycle which is similar to the current cycle.  Back then exhchanges would raise margin requirements as a course of normal business practice.  They didn't raise requirements in order to shake out long position holders. 

How about stopping all the conspiracy theory stuff that's recently been put up here at ZH about manipulation?  You're sounding like a broken record.

Fri, 02/11/2011 - 10:55 | Link to Comment Tyler Durden
Tyler Durden's picture

You are absolutely correct. Yet no matter how patiently we wait, we fail to see comparable margin hikes in retail and prime broker stock accounts making it even modestly more difficult to engage in irrational exuberance vis-a-vis stocks. Ever.

Fri, 02/11/2011 - 14:01 | Link to Comment topcallingtroll
topcallingtroll's picture

interesting point

Fri, 02/11/2011 - 10:58 | Link to Comment EscapeKey
EscapeKey's picture

...and the reduced Copper margin - the one metal JPM is long - is down to reduced volatility?

Fri, 02/11/2011 - 11:21 | Link to Comment GoinFawr
GoinFawr's picture

GS is long platinum, any margin hike there recently?

Fri, 02/11/2011 - 13:35 | Link to Comment CrazyCooter
CrazyCooter's picture

The biggest byproduct of a copper mine is ... wait for it ... silver. Copper price to the moon will have Cu mines going full tilt ... and pushing Ag production with it.

Cooter

Fri, 02/11/2011 - 11:03 | Link to Comment jus_lite_reading
jus_lite_reading's picture

The point is margin hikes are used as price controls, and yet prices are increasing on a daily basis due to inflationary pressures. Volatility indicates something is brewing up or down, thus the margin hikes.

 

What TD prints here is not some conspiracy theory hogwash you'll find on other sites. Take it with a grain of salt and for what it is worth. Use your knowledge about how the markets work to sift through it all. That means enjoy the sometimes sensational headlines, but absord the real meat and don't be an ignorant biased fool.

Fri, 02/11/2011 - 11:18 | Link to Comment GoinFawr
GoinFawr's picture

Hey Vint, I don't know if you've noticed but under the light of dogged delving a number of 'conspiracy theories' have been exposed to be entirely valid.

Recurring themes are hardly equivalent to a skipping CD; more like ever strengthening inductive arguments.

 In fact, it's looking more and more like the mainstream have actually been the ones wearing the tinfoil hats all along.

Try to keep an open mind, it's crucial.

Fri, 02/11/2011 - 11:23 | Link to Comment eckart
eckart's picture

"there are no coincidences...only the illusion of coincidence"

Fri, 02/11/2011 - 11:50 | Link to Comment zaknick
zaknick's picture

Going all the way back to Woodrow Wilson and his bankster supported " progressives", this country's evil elites have been on one long ethnic cleansing, genocidal rampage ( tgey were even behind Hitler and Mengele).

I can prove that assertion. How? By exposing one after another trye conspiracies by the evil elites to hijack this country and its reality.

Want proof? Go to: www.scribd.com/zaknick and read "A brief comment".

Vint? fufufufufufufu

Bob Dylan's Masters of War:

You play with my world like it's your own little toy.

cosmic scale payback is on the way, Vint u little biotch.

GOLD (and Silver 2!)

Fri, 02/11/2011 - 13:55 | Link to Comment topcallingtroll
topcallingtroll's picture

wow.  We have medicines for that level of paranoia.  If you put that energy in something productive you might really be successful some day.

Fri, 02/11/2011 - 11:39 | Link to Comment zaknick
zaknick's picture

I bet the slug is nothing but a troll from some farcist, way overpaid, unionized "homeland" (true echoes of Hitler) .gov employee.

So this and porn is all they do!

Fri, 02/11/2011 - 13:57 | Link to Comment topcallingtroll
topcallingtroll's picture

No.  We checked him at the gate.  He is just trying to point out the alternative viewpoint.  They have to raise margin when volatility increases.

Fri, 02/11/2011 - 14:19 | Link to Comment Going Loco
Going Loco's picture

Yeah, that sideways volatility is a big problem. Volatile prices staying the same day after day. Can't have that sort of thing. Market intervention is required.

Fri, 02/11/2011 - 10:57 | Link to Comment Cocomaan
Cocomaan's picture

Cotton was 60 cents a pound back in 2006. 

 

But I think Krugman is totally right. Cotton hasn't doubled in price over the last year because of anything other than global warming. No, speculation and Bernank has nothing to do with it at all.

Fri, 02/11/2011 - 10:58 | Link to Comment RobotTrader
RobotTrader's picture

I'm watching the hedge funds battle each other on Chipotle....

No doubt tons of guys shorting this thing in advance of rocketing food costs..

Now they are getting blowtorched.  This thing could close up $25 or down $40 today.  Who knows?

Fri, 02/11/2011 - 11:31 | Link to Comment firstdivision
firstdivision's picture

There is some serious runup today in some other IBD favorite stocks.  Look at BKI

Fri, 02/11/2011 - 11:00 | Link to Comment schoolsout
schoolsout's picture

I'll admit it...I chuckled at that.

 

Oops, meant to post under another poster.

Fri, 02/11/2011 - 11:01 | Link to Comment OMG
OMG's picture

Rayon imported from China is the answer

Fri, 02/11/2011 - 11:13 | Link to Comment economessed
economessed's picture

No.  The answer is to kill fur-bearing mammals, eat them, and stitch their hides together into attractive and practical clothing.  This is how we win at this game.

Fri, 02/11/2011 - 11:17 | Link to Comment TheDriver
TheDriver's picture

Bernanke has fur, no?

Fri, 02/11/2011 - 11:38 | Link to Comment economessed
economessed's picture

I believe one could braid his back hair, yes.

But that leaves us to speculate -- would he taste like chicken or frog legs?

Fri, 02/11/2011 - 11:20 | Link to Comment financeguru500
financeguru500's picture

Lol, isn't that how the sewer people in the movie "Demolition Man" lived? I believe they stole from Taco Bell and dressed in rat clothes. Who would have known that a crappy early 90's movie would be so right on about the future of our country.

Fri, 02/11/2011 - 13:52 | Link to Comment topcallingtroll
topcallingtroll's picture

hamburguesa de rata!  If rat burgers are good enough for the demolition man they are good enough for me.

Fri, 02/11/2011 - 11:31 | Link to Comment Rodent Freikorps
Rodent Freikorps's picture

Properly tanned hobo skins wear like fine Corinthian leather.

Fri, 02/11/2011 - 11:06 | Link to Comment HedgeFundLIVE
HedgeFundLIVE's picture

Commodity stocks rally as inflation fears grow. Inflation contracts equity multiples. All reasons why I'm expecting now a 10% correction (instead of my previous 3-4% estimate):

http://www.hedgefundlive.com/blog/friday-market-expectations-i-still-havent-found-what-i-am-looking-for

Fri, 02/11/2011 - 11:08 | Link to Comment mmlevine
mmlevine's picture

Is the core CPI going to be changed to exclude food, energy and cotton?  Volatile underwear prices are always a problem.

Fri, 02/11/2011 - 11:18 | Link to Comment johnnymustardseed
johnnymustardseed's picture

Is the core CPI going to be changed to exclude food, energy and cotton?

Yes and soon all that used to be cheap shit from China

Fri, 02/11/2011 - 13:51 | Link to Comment topcallingtroll
topcallingtroll's picture

no but you can always hedonically substitute used underwear.  Usually you can bleach out the skid marks.

Fri, 02/11/2011 - 11:16 | Link to Comment WALLST8MY8BALL
WALLST8MY8BALL's picture

Sheep populations are dwindling troughout the world. Wool prices have gone up roughly 25% since Jan 2011. Grain prices going higher.

 

http://www.asx.com.au/products/asx-wool-futures-and-options.htm

 

 

Fri, 02/11/2011 - 11:17 | Link to Comment schoolsout
schoolsout's picture

Everywhere I look, I see sheep...whatchoo talkin' 'bout, Willis?

Fri, 02/11/2011 - 11:29 | Link to Comment WALLST8MY8BALL
WALLST8MY8BALL's picture

I beleive you mean Sheeple?

Fri, 02/11/2011 - 12:29 | Link to Comment MolotovCockhead
MolotovCockhead's picture

They are all the same...

Fri, 02/11/2011 - 16:45 | Link to Comment WALLST8MY8BALL
WALLST8MY8BALL's picture

Naaaaah

Fri, 02/11/2011 - 11:20 | Link to Comment stoneman sacked
stoneman sacked's picture

One thing that may be of interest to the ZH readers is that US dollar is printed on paper made from cotton fibers. May be all the money printing that our hero Bernank is literally causing cotton prices to rise

Fri, 02/11/2011 - 12:12 | Link to Comment Mad Max
Mad Max's picture

Oh you're a funny guy.  If Ben's demand was responsible, we would be missing electrons.  Maybe that explains the Texas brownouts.  When lower Manhattan and central DC have blackouts, we should blame Ben.

Fri, 02/11/2011 - 11:30 | Link to Comment UglyPatheticPauper
UglyPatheticPauper's picture

There is No Inflation!!  Benny was right!!

Fri, 02/11/2011 - 12:04 | Link to Comment Fercho
Fercho's picture

Whats going on with MUB? Is China selling Fannie and Freddy and buying municipals?

Fri, 02/11/2011 - 13:49 | Link to Comment topcallingtroll
topcallingtroll's picture

I don't know about the rest of you, but when I look at peoples' closets they are packed with clothing.  We all have too much clothing anyway.  We could all stop buying for a couple of years if needed and live off the surplus and resale shops.  I got a great Italian suit at a resale shop one time for 15 dollars.  You couldn't even tell it was used.  I suspect prices have gone up since then, but still 50 bucks for a nice italian suit is a great deal.

Fri, 02/11/2011 - 14:19 | Link to Comment oh_bama
oh_bama's picture

cotton, like food and energy, is too volitile to be part of the CPI...

BTFD!!

 

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