Cotton price skyrocketing.

Imagine the price of cotton 2 years ago was $0.40 per pound,as at Friday's closing was $1.8997 with an intraday range of 1.8796 - 1.9455.
Cotton is a basic crop that is a major input for the textile, agriculture, and food industries. 64 percent of cotton is used for apparel, 28 percent for home furnishings, and 8 percent for industrial products.The US as world's major exporter stimulated $120 billion of business revenue just from cotton.
Overall, China is the largest producer and consumer of cotton, accounting for 29 percent of the world's production and 43 percent of the world's use of milled cotton in 2007. China manufactures apparel and other textile products from the milled cotton, often for export.Demand in this and other emerging markets is a leading driver of cotton prices, as are seasonal growing conditions and the prices of competing crops.
Higher corn and soybean prices due to the production of biofuels makes those crops more attractive to growers, displacing cotton production and driving up prices. In 2008, US cotton acres are down 30 percent, to 11 million from 15 million in 2007. Demand for cotton seed, a significant byproduct of cotton production used in the food industry and for animal feed, also influences cotton prices.
Cotton farmers benefit from higher prices. However, the prices of competing crops such as corn and soybean are also very attractive and have contributed to smaller cotton production.
Polyester is a synthetic fiber that becomes more attractive with higher cotton prices. Polyester fiber producers include Nan Ya Plastics Corp (TPE:1303) and Wellman Inc (OTC:WMANQ).
Cotton Exchange Traded Funds (ETF's) such as ETFS Cotton (LON:COTN) track cotton prices.
Clothing, footwear, and industrial textile manufacturers are hurt by rising cotton prices. For example, cotton is the primary raw material for Hanesbrands, representing 6% of cost of sales, and an increase of $0.01 per pound in cotton prices translates to a $3.3 million increase in annual raw material costs.However, the effect of this on company earnings is uncertain because the effect of cotton prices on industry selling prices cannot be determined.
In the US, 27 textile mills closed in 2007 and industry employment fell by 51,000. While higher cotton prices are not helpful, the US plant closings are mostly due to increased competition from Chinese imports.
Cotton Futures contracts:-
Cotton No. 2 futures are traded on the New York Board of Trade under ticker symbol CT in cents and hundredths of a cent per pound.
Delivery Dates:--Cotton No. 2 futures are delivered every year in March, May, July, October, and December.
Contract size:--One Cotton No. 2 futures contract on the New York Board of Trade is 50,000 pounds net weight.
Tick Value:--1/100 of a cent (one "point") per pound equivalent to $5.00 per contract.
Daily Price Limit:--5 cents above or below previous day's settlement price.
Trading Hours:--On the CME Globex electronic platform: 2:30 AM until 2:45 PM, New York Time.
Last Trading Day:--Seventeen business days from end of spot month.
Delivery grades:--Quality: Strict Low Middling, Staple Length: 1 2/32nd inc.
Margin:--Initial Margin: $1820.00 Maintenance Margin: $1300.00
Everyone can trade in cotton futures even if you don't own a cotton farm.You just need to close out your position if you have made a profit in intraday trading or carrying an overnight position.Just like normal trading,you need a stop-loss or to cut loss if market is against you as the expiry date nears.
Latest News:-
THE world's top cotton-futures exchange is clamping down on speculation amid soaring demand that has sent prices so high that they threaten losses for mills, commodity merchants and apparel producers.
The next few weeks are a key time for cotton mills, which hold contracts to buy cotton under the March contract, which expires on March 9. Usually, they would have locked in a price for that cotton. But as prices kept soaring, many held off, hoping for a decline that never came.
IntercontinentalExchange, commonly referred to as ICE, fears that speculators could take advantage of the mills by buying up cotton, thereby causing a squeeze that would drive prices even higher. In response, ICE yesterday said it will increase its scrutiny of big positions from now on.
Market participants wanting to hold more than 300 contracts, the equivalent of 30,000 bales, must request approval and prove they have an economic need for the cotton. While this rule hasn't usually been enforced in the cotton market, it is has been regularly applied across other agricultural products.
Cotton is in a mess,it's moving so quickly, predominantly up. Every day you pass thinking you are going to see something better, you risk missing out on cotton all together. If you don't take cotton today, your costs are escalating and you are under water pretty quickly.
Tracking the Dow,Friday 11/02/11.(5 market days to index/options expiry)

9:30am:--Bearish 20.0 points gap down.Egyptian unrest hangover.Gap immediately being covered.
10:30am:-- Buliish inverted at session high. Reports that an index of consumer sentiment climbed in February.
11:30am:--After reaching the morning high,pullback begins for the mid-morning break.Bearish engulfing.
12:30noon:--Holding at session MAV support line.Egypt's President Mubarak resigned.A sigh of relief to the market.
1:30pm:--Doji stars hanging on within mother bull.Stocks in mortgage insurers surged on a government proposal to shrink the size of the Federal Housing Administration, a government-run competitor to the private mortgage insurance industry.
2:30pm:--Bullish spike up to new high.No more geopolitical tension,a good news.
3:30pm:--A double top and time for a pause.Bearish harami.
4:00pm:--Bullish close above the bull pivot support line.

A relief rally after Egyptian President Hosni Mubarak resigned, easing tension around the Middle East for now.
The bulls are still finding new high each week.One great risk has been eliminated so time to focus on the economic outlook.
Stocks reached 21/2 years high and the undertone is extremely bullish.