Cotton

Supply and demand for cotton can be impacted by a number of factors, ranging from extreme weather to the use of substitutes among consumers. Cotton prices are mainly driven by the factors such as Acreage Allotments, which is the percentage of usable land allocated to cotton growing. Weather pattern in production region is another factor which determines the supplies and prices, for example heavy rains can delay harvests. Strength and weakness of dollar also impacts cotton prices. A weak dollar generally boosts the cotton price, since this makes the commodity cheaper to consumers around the world. Other factors on which cotton prices depend include overall economic health and cotton alternatives.
It was after the price surge in 2009 that investors began making cotton a part of their investment portfolio. This soft commodity has the potential to deliver big gains and add diversification benefits, although there is some risk involved too. The three widely ways to invest in cotton include Exchange Traded Funds, Futures and Stocks.
Cotton Futures Contract