Attention Commodity Shoppers: Cotton's Blue Light Special

Cotton futures have quietly dipped to their lowest levels in two years, prompting our "contrarian alert" to sound. King Cotton, since rocketing to levels not seen since Reconstruction, has since plummeted:

Cotton spikes, and crashes. (via Barchart.com)

Two months ago we mused that cotton and rice, both off significantly from their highs, may have piqued the interest of Jim Rogers, who recommended that investors interest in agriculture start by looking at what's down the most. Since then, cotton has drifted nearly seventeen cents lower, and is now sitting at levels not seen since early 2010.

On Cue: Supply Cuts Have Arrived Just as high prices tend to cure themselves with increasing supply and/or decreasing demand, low prices commonly exhibit the equal but opposite effect. And we're already seeing signs of supply going away, as China will decrease cotton plantings by nearly 10% this year...

Please read my full cotton analysis on Seeking Alpha.

Low Acreage Propels Cotton "Limit Up"

The smallest acreage for cotton in 26 years has propelled the fluffy material "limit up" for the day, in what amounted to almost a delayed reaction from traders, as cotton was initially down yesterday when the report came out. Likely due to the weakness shown by the other grains.

You'd think that with cotton supplies continuing to shrink rapidly, a run up toward $1 is only a matter of time. October cotton futures closed today at 58.63.

Taking a look at the chart - maybe cotton is indeed getting wound up to make a run here. A solid pop over 60-cents would be a strong cry to "hop aboard"!

Cotton prices have resembled one of those lame kiddy park rollercoasters this year.

(Source: Barchart.com)