As World Becomes Zimbabwefied, Cotton Futures Surge 17% In One Month

Tyler Durden's picture

One of the benefits of America finally seeing what Zimbabwe went through as it entered hyperinflation, ignoring for a second that the Zimbabwe stock market was the best performing market, putting Bernanke's liquidity pump to shame, is that very soon everyone will be naked, once companies finally realize they have no choice but to pass through surging input costs. And while some may be ecstatic by the S&P's modest rise YTD, it is nothing compared to what virtually every single agricultural product has done in the first month of 2011. To wit: Corn spot up 7.76%, wheat up 5.63%, Rice up 10.08%, Hogs up 10.16%, Sugar up 5.64%, Orange Juice up 3.33%, and cotton.... up 17.08%. That's in one month!

The chart below shows various commodities performance YTD. This is just the beginning. We are curious what happens when rice goes up 100% in 2011... That is only about 30 limit up sessions.

And cotton...

As a reminder, here is how the Zimbabwe stock market performed in 2008. We are heading right there.

From Businessweekly, October 22, 2008

markets across the world have been crashing, the Zimbabwe Stock
Exchange has being seeing record gains as citizens turn to equities to
protect their money from the country's hyperinflation.

benchmark Industrial Index soared 257 percent on Tuesday up from a
previous one day record of 241 percent on Monday with some companies
seeing share prices increase by up to 3,500 percent.

before Wall Street traders start packing their bags and heading south,
they should bear in mind that these figures are just another
representation of Zimbabwe's collapsing economy and are almost
meaningless in real terms.

Zimbabwe, once a regional breadbasket,
is staggering amid the world's worst inflation, a looming humanitarian
emergency and worsening shortages of food, gasoline and most basic
goods. Inflation is at 231 million percent, but some experts put it more
at about 20 trillion percent.

"Why leave money in the
bank?" asked Emmanuel Munyukwi, chief executive of the Zimbabwe Stock
Exchange at a seminar on the doing business in Zimbabwe on Tuesday.

are forced to come on the stock market. They believe that after hard
currency, the stock market is the only viable option where you can get a
bit of a return," he said.

Zimbabwe's stock exchange,
established in 1896, is one of Africa's oldest and the fourth largest. A
securities commission has been established and it is hoping to follow
in the footsteps of other countries like its neighbor South Africa and
list as a company.

There are 19 stockbroking firms in Zimbabwe
and 90 percent of investors come from institutions, asset managers or
pension funds. About 8 percent of investors are individuals and only 2
percent are foreigners. This is in comparison to about a decade ago when
foreigners made up about 30 percent of investors.

expressed his dismay at the "gross economic mismanagement" by the
Zimbabwean government which has led to the collapse of the economy,
however, the stock exchange was managing to survive despite the harsh



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Ragnarok's picture

OT: Mervyn King: The other King's speech

The Governor of the Bank of England's grim prognosis for UK PLC's recovery capped a dismal economic week.

fuggetaboutit's picture

Wonder if there is any correlation between input prices surging and orders in ISM going berzerk the last 3 months?

Wonder what happens when those orders are filled and the demand is choked off by higher cost?

Probably not, its probably just an awesome economic recovery with the highest structural unemployment in US history

jus_lite_reading's picture

I talked to a contact who I haven't seen in a very long while at a gathering the oter day- long story short, she works in NJ at the unemployment office in (can't say which one) county and said to me (roughly what I remember)

"Things are bad, really, really bad. I see people coming in begging for extensions and we turn them away. The worst part is those people simply fall off the books... We now have 3 full time stationed County Sheriffs deputies keeping the order. I work in fear of my life..."

I swear she had real fear in her voice of how bad things are about to get here in NJ and the whole US. She is worried. Any questions?

Update-- I forgot to mention this! She said "starting last November we had the line wrapped around the building. The lines for unemployment have never been so long."


HamyWanger's picture


You are comparing the USA to Zimbabwe? The USA are not a corrupt, banana, third-world country with printing presses running day and night. We have the best elites in the world, democracy and prosperity. The future looks bright for us.

I'm glad I'm an American.

Mr Lennon Hendrix's picture

Sing with your friend Harry,

Jump down turn around pick a bale of cotton, jump down turn around pick a bale a day!

Calmyourself's picture

Right on Hammy, besides we will never run out of ink, we are the US after all..

Commander Cody's picture

Tongue firmly in cheek, as usual, eh Hamy?

Popo's picture

Until now, I didn't know that you were just trolling.  


Hamy, you've jumped the shark.

Cindy_Dies_In_The_End's picture

Hamy's awesome comments and the ensuing trainwreck of people that don't get him (IE- "you got Hamy(ed))is one of the ZH community's best "inside secrets"

Hedgetard55's picture

As I said on another thread, Hamy pwns this site!

Ratscam's picture

Maybe not as corrupt in % per capita but in USD terms definitely far worse off than Zimbabwe. Look at all the US "nation building" in the world that has impoverished dozens of countries installing a US toy dictator. US was apart from Mao and Staling a big agressor of the 20th century. In the 21st definitely the biggest, killing millions of people mainly justified with false flag operations, costing their own countries one trillion USD per year. But the best is that the ruling elite fuck their own people as well as the world via the unconstitutional Federal Reserve Bank.

Difficult to be proud of this country after Andrew Jackson, but especially after 1913.

Fernley Girl's picture

I (heart) Hamy.  No one else can channel Harry like Hamy can!  ;)

tonyw's picture

haMy, you certainly have the best government that monied interests can BUY. In other corrupt countries the governments have to steal the assets from the people.


Xibalba's picture

gold and silver down about the same. 

EscapeKey's picture

(1430-1335)/1430 = 6.6%, so yeah, totally "about 17%".

papaswamp's picture

From it's recent high (31.02-28.47)/31.02= down 8%...not quite 17%

Anonymouse's picture

But if you add 8% and 6.6%, you get 14.6%, which is pretty close to 17% (especially after you convert troy oz. to celsius). 


And remember, he said "gold AND silver", not "gold OR silver"

RmcAZ's picture

Deflation, bitchez... Oh, wait...

Bay of Pigs's picture

Mish says rising prices isn't inflation. This is deflation.

Pardon me?

Wow, just wow...

alien-IQ's picture

We are fast approaching a dollar collapse...of this there is little doubt.

It seems that was the Bernanks plan all along. He's now one step close to "mission accomplished".

Mike2756's picture

That was my thought. Currency first, then bonds to follow, Fed or no Fed.

HarryWanger's picture

You can argue Zimbabwe but really, the economic numbers are pretty impressive. Zimbabwe didn't have that going for it. 

For one second, just one second, can you take off the "gray, world is doomed" glasses and look objectively at the data? It's becoming comical that post after post is nothing but pessimism when in reality we're seeing a nice turnaround in the economy. That cannot be denied or argued sensibly at this point.

Look, I'm a small business owner and have told everyone here for months how strong the turnaround has been. But those stories don't want to be heard here. Only the "world will end" tomorrow stories by the likes of clowns like Martensen and Rosie. Ridiculous.

EscapeKey's picture

Right, so looking at absolutely surging input and outputs costs is "doomster like".

I'm glad you're not information czar, or us uninformed minions no doubt would be "shielded" from this "societally harmful" information.

Mark McGoldrick's picture

The rise in cotton prices has - once again - nothing to do with Bernanke.

It started last summer with huge supply/demand imbalances, as farmers harvested the smallest cotton crops in 20 years.  After the catastrophic collapse of our world economy in 08/09, it has proven very difficult for producers to gauge supply/demand equilibriums in a variety of industries.  Not wanting to be stuck with inventory, coupled with a surprisingly robust economic rebound has fucked up all sorts of supply/demand equilibriums.   

Commodity traders take these imbalances, exploit them, shoot them up with steroids and create alpha. 

Why is everything, EVERYTHING have to be Bernanke's fault, no matter how absurd?  We need TRUTH, not libertarian catnip.'s picture

Although the Bernank may have nothing to do with the rise in cotton prices, I can assure you that the relative weakness in the US dollar in which cotton is priced has a lot to do with its recent parabolic type move along with other commodities.

The rise in cotton prices has been due to a combination of supply problems (floods in Pakistan and early frost in China), increased demand from Chinese consumers, and the weakening of the US Dollar, as well as increased demand (in comparison to 08/09) from US and rest of world.

And the rise in cotton prices has had EVERYTHING to do with the rise in Polyester and Nylon prices the cheaper alternatives that everyone has surged into.  I work in the consumer goods industry making backpacks, apparel, etc.. and we are on 24 hour price quotes for everything from materials to trims.  In my 20 years in the industry I have never experienced anything like it. 

Mark McGoldrick's picture

I agree that the price of cotton is affected by dozens of variables, but the US dollar is not high on that list.  The US dollar has moved in a ~12% range for the past 2 years, while cotton has over doubled in the past six months. There is a complete disconnect here.  Furthermore, look at the huge downward slope of the US dollar from 06-08, yet look at the stable price of cotton.  No relationship there, at all. 

Here is a chart of the US dollar:

Here is a chart of cotton:

But the larger point of my post is that this continuous attempt to solely blame Bernanke for everything wrong in the world is ludicrous.  


EscapeKey's picture

Right, so once again

- cotton is supply/demand imbalances

- equities is improving economy

- oil is opec distortions

- gold/silver is speculation

- platinum is strong car demand

- and i forget which one is political instability.

Alternatively, this underlying trend could all be explained by an increase in the monetary base, occam's razor and all. But hey, keep it up. Personally, I can't wait to hear what the next excuse will be.

Mr Lennon Hendrix's picture

You will be typing this at DXY 66 I presume.

whatz that smell's picture


beggar thy neighbor, bitchez!

praise be the bernank! may he ease a thousand years!

Max Hunter's picture

You will be typing this at DXY 66 I presume.

Looking at the 5 yr... 76.2 ish looks like a very strong trend line.. If it's broken.. 66 could be seen in a couple of months... 2008 will look like a walk in the park..  If it bounces... Could get a nice pull back

Think the Euro and CHF will have the steam to push it through?? I don't think the Yen or GBP will add much to the pressure...  It will be interesting.  AUD could help the push down..

Going to be interesting at that point..  

papaswamp's picture

gets any lower and Japan will panic and step in again.

Mike2756's picture

Buck should be rallying on this news, then. They can't trash bonds too much due to Fed manipulation, what's the next best thing?

alien-IQ's picture

you remind me of someone I passionately loathe.

Commander Cody's picture

Do you believe everything the government and government-sponsored organs got to say?  I don't.  I'm skeptical about the reality of said "recovery".  However, I'd really like to see it happen for everyone, not just for the 10% who are riding the wave of Fed-inspired wealth effect.

gwar5's picture

The world is on fire, it was predicted, and you still believe in Santa Claus

Now's time for a good joke about Egypt and denial river, but you figure it out

Tell Benbabwe his mummy is going to spank his saggy bottom if he doesn't stop

PhattyBuoy's picture

The Genie is out of the bottle in the ME. Good luck putting a cork in that one ...

Egypt tumbles into complete chaos!

Where it spreads from there, is anyone's guess, but rest assured it will spread ...

Popo's picture

So you're basing your "turnaround" theory on your completely granular data?  You're a small business owner?  Lulz.

Sam Clemons's picture

Harry, remember, you are being paid in dollars, something that there is more of ($4B) every day.  Of course things measured in dollars will look good.  It doesn't take a braintrust to figure this out.


jus_lite_reading's picture

Actually it works out to $6.3 BILLION 24/7 365 but Hu's counting?

I mean, all that cash to pay fat bonuses I HAVE NEVER seen before must be good as Harry claims home decor/consumer discretionary are rocking...

Except, that according to my "Market to Main" super computer is predicting with each tick higher in the DOW, the US moves one foot closer to total revolution, Egyptian style.


Either way, I hope BEnron's got a an exit plan

macholatte's picture

OK Harry. I'll bite. Just what small business are you in? You must think that your company's performance is indicative of the nation at large. Explain.

For the record, if you are doing well, then good for you. May there be 10 million more like you so the doom-n-gloom will be lifted. Seriously.

Personally, I'm not seeing such a rosy future.

HarryWanger's picture

Consumer discretionary in what would be categorized as Home Decor. We sell through retail outlets across the country and recently signed some international licensing agreements. We had our best Q4 in 9 years of business and just came off our best January ever. 

I've been reporting this here since early fall that I saw an amazing turnaround in consumer spending. Yet, the people here who apparently never leave their houses or computers, doubted and continue to doubt that recovery. It's silly.

redpill's picture

What's silly is it not occurring to you why people would be spending more money on their current house, and where they used to spend that money instead. Hint: home sales at generational lows might have something to do with it

AnAnonymous's picture

We had our best Q4 in 9 years of business and just came off our best January ever. 


Home decor, best performances ever in nine years of business, current quagmire context. Others would be extremely alerted by that unexpected cocktail.