BAL iPath Series B Bloomberg Cotton Subindex Total Return ETN : Bullish and Bearish Analyst Opinions

Energy costs push up food commodity prices.

I'm certainly bullish the grain market. I thought the grains are bottomed... I'm certainly bullish cotton. Agricultural and soft commodities have been beaten down and have formed a technical bottom. When the overvalued equity market eventually sells off, institutional funds will rotate their capital into these undervalued, hard assets. Going long grains and cotton positions a portfolio ahead of the institutional capital rotation out of tech and equities and into cheap commodities. A severe global recession could destroy demand across all asset classes, dragging down even undervalued agricultural commodities.

"In the Midsouth, other competing crops such as rice and cotton are also losing ground to soybeans." This is a supply-side play. If farmers are abandoning Cotton to plant Soybeans to chase higher margins, Cotton acreage will drop. Lower planted acreage leads to reduced supply, which historically supports higher prices for the neglected commodity. Long Cotton (BAL) as a contrarian trade on supply destruction. Global demand for cotton (textiles) could weaken due to macroeconomic slowdowns, negating the benefits of tighter supply.