How to Trade Cotton, Sugar and Lumber: Analyst
(or how to drive dairy farmers into bankruptcy - ton of hay up from $190 to $350 - blame it on Ethanol - Joe SixPack now trades lumber and OJ - insane)
Published: Tuesday, 3 May 2011 | 10:39 AM ET
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By: JeeYeon Park
CNBC News Associate
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Cotton, sugar and lumber prices have been on the decline in the last month, so how should investors trade each of the commodities? Sterling Smith, commodity analyst at Country Hedging, shared his best plays.
Trading Cotton
“We had a huge run-up in prices back to post-Civil War highs, and the cotton market’s trying to find balance in the near-term contracts,” Smith told CNBC. “You can look out to December cotton for some trading plays, [but] we do have weather potential that can drive prices higher.”
Trading Sugar
“Right now, look at sugar being a play to the short-side,” he said.
“Then it’s going to depend on what India does—whether they end up being an exporter or an importer. If they end up not exporting any sugar, we have some good upside there.”
Trading Lumber
Meanwhile, Smith said the housing market largely determines lumber prices.
“The housing market is terrible and I don’t see that improving until 2014, at the earliest, for new home construction," he said. "But lumber supply can be controlled more readily than any other commodity so when we see prices drop there, I think a person can look to buy it if they’re careful.”
* Ethanol, Corn, OJ & More: Key Ag Futures at a Glance |
