Daily Adventures In 'Limit Up' Zimbabwefication: Cotton Explodes As Asian Mills Panic

It seems like so long ago that we noted that cotton was up over 17% year to date. Alas it was yesterday. Yet the time-lag effect is not surprising considering that less than 24 hours following our initial report cotton is now up 23% YTD, or a 5% pick up in one day! This was yet another limit up day for one of the world's most popular commodities, which closed at $169.72, a 150 year high. The reason, per Reuters, for the relentless surge in cotton's price is Asian mills: "It's basically mills panicking," said Lou Barbera, a cotton analyst for brokerage VIP Commodities. "Overseas mills are getting the ball rolling." In reality, mills are just one part of what is rapidly becoming a perfect storm for a commodity which will soon destroy margins for all mid-tier retailers: "Powerful cyclone Yasi in Australia also worried the market because it would hit prime cotton-growing areas. Losses there could further crimp supplies in Asian markets, dealers said. Sharon Johnson, senior cotton analyst at brokerage Penson Futures in Atlanta, said it is "possible there's a squeeze" in the U.S. cotton market."

And as if that was not enough, here are the catalysts for the immediate future, which may well continue pounding cotton limit up day after day:

On Thursday, the market will look at the U.S. Agriculture Department's weekly export sales report to gauge demand for U.S. cotton.

The market will then turn its attention to industry group the National Cotton Council of America which will release its annual plantings survey for cotton at its annual meeting in San Antonio, Texas on Friday.

A Reuters survey at the Beltwide Cotton conference this month had forecast U.S. 2011 cotton plantings from 12.48 million to 12.53 million acres, a 5-year high and an increase of around 15 percent from last year's cotton sowings of 11.04 million acres.

No matter what the reason, we wonder how long before the Fed realizes that its CPI indicator is a complete joke when juxtaposed witch charts such as these:

And YTD: