Playing the Silly Game of Calling a Top: Have Cotton, Silver and Oil Topped?

Here's a chart of silver. I am wondering whether we have topped last Friday near $38.25:

Oil is finding some strong resistances around $107 and hasn't been able to breach it yet:
March 25 (Bloomberg) -- Oil fluctuated in New York as the U.S. economy grew more than previously estimated in the fourth quarter, a signal demand may be increasing, and crude failed to breach technical resistance at its 30-month high.

Oil swung between gains and losses as the economy expanded at a 3.1 percent annual rate in the quarter, compared with a 2.8 percent estimate last month, Commerce Department figures showed today in Washington. Crude reached $106.69 a barrel in intraday trading yesterday, near the peak of $106.95 on March 7.

“We’re having difficulty maintaining upward price momentum,” said Jim Ritterbusch, president of Ritterbusch & Associates, a Galena, Illinois-based consulting company. “We tried to push up to those March highs yesterday and failed just below the $107 mark.”

[...] Prices have risen 3.2 percent this week and have gained 31 percent in the past year.

New York crude has rallied 25 percent since protests began Feb. 15 in Libya, a member of the Organization of Petroleum Exporting Countries. The conflict is the bloodiest in a wave of uprisings that has toppled the presidents of Tunisia and Egypt and spread to Algeria, Bahrain, Iran, Oman, Syria and Yemen.
Finally, one of the most overpriced commodity, cotton, might have left its days of glories in the past. But the fact that analysts are forecasting a big drop makes me very suspicious of my own forecast:
March 28 (Bloomberg) -- The rally that drove cotton prices to the highest since America was recovering from the Civil War is ending as farmers from Texas to New South Wales plant record crops and replenish stockpiles for the first time since 2007.

Cotton will drop 51 percent to $1 a pound by Dec. 31, according to the median in a Bloomberg survey of 14 analysts and traders. Hedge funds are already cutting bets on higher prices by the most in three years. Output may rise 11 percent to 127.5 million bales in the year that starts Aug. 1, three times faster than a 3 percent gain in demand to 120 million bales, the U.S. Department of Agriculture estimates. One 480-pound bale is enough for 215 pairs of jeans.

“We have had quite a nice run, and I don’t see it sustaining,” said John Stephenson, who helps manage more than C$2 billion ($2 billion) at First Asset Investment Management Inc. in Toronto. “More acreage will be dedicated to cotton, and in a scenario where consumers are facing higher food and fuel prices, clothing will take a back seat.”

Cotton rose to $2.197 on March 7, the highest in 140 years of trading in New York, after flooding in Australia and Pakistan and freezes in China ruined crops.  
[...] Farmers are responding by planting more cotton, which may come at the expense of corn and soybeans, First Asset’s Stephenson said. Corn gained 79 percent since July 1 and soybeans climbed 50 percent, driving global food costs to a record, the United Nations estimates. An extra 44 million people were driven into “extreme” poverty since June, according to the World Bank, and riots spread across North Africa and the Middle East, toppling leaders in Egypt and Tunisia.
While March 7 marked the peak, it’s much less than in previous decades. In 1973, cotton jumped to the highest in at least 14 years to 99 cents, the equivalent of $4.92 today, according to a calculator on the website of the Federal Reserve Bank of Minneapolis.

Cotton closed at $2.0449 on March 25, after surging 178 percent since mid-July, the most among the 24 commodities in the Standard & Poor’s GSCI index. The raw-materials gauge climbed 42 percent, the Standard & Poor’s 500 Index gained 20 percent and Treasuries lost 0.2 percent, a Bank of America Merrill Lynch index shows.
Futures anticipate a drop to $1.2792 by December, according to ICE Futures U.S. data. Costs won’t fall to the $1 predicted in the Bloomberg survey until October 2012, the data show.

Even $1 would still be 64 percent higher than the 10-year average of 61.16 cents. Stockpiles in warehouses monitored by ICE Futures U.S. plunged 81 percent since June and in October fell to the lowest level since at least August 2002.
The same surge in prices that is helping boost U.S. farm profit by 20 percent to a record $94.7 billion is hurting manufacturers, retailers and consumers.
 My comment here: I am as sure as can be, than when the price of cotton falls, farmers all over the world will be in the streets asking the governments to do something, and putting the blame on the evil speculators. They are not complaining when prices rise and when those same evil speculators help them make a windfall profits...


No comments: