T & K Futures Believes that Cotton Futures Prices Are a Bubble Ready to Burst

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Cotton futures prices have had a meteoric rise over the last year as bad weather around the globe and strong demand helped push prices to record levels. There is an old saying in the commodity markets that "High prices tend to cure high prices".

Cotton futures prices have had a meteoric rise over the last year as bad weather around the globe and strong demand helped push prices to record levels. There is an old saying in the commodity markets that "High prices tend to cure high prices". Cotton prices are more than twice their normal baseline and will most likely correct back down to normal levels very soon.

Cotton acreage peaked back in the 1995-96 season at 16.93 million acres in the United States before it came down to 9.15 million acres. The 2010 cotton acreage was estimated at 11.04 million acres. With cotton prices near all time highs and plenty of soil moisture in the major U.S. planting areas, it looks like when planting begins in March that this year's crop will get off to a great start. The March 31st prospective plantings report will give some insight to traders as to the probable increase in planted cotton acres and may help the price of cotton find its top.

Cotton will have to battle corn and soybeans for extra acreage this year and may be able to get near its all time high around 17 million acres. Corn and soybean futures prices are near 2 ½ year highs but cotton is at all time highs and is twice as high as it was last year. It seems to make more economic sense for farmers to plant more cotton this year to take advantage of these incredible cotton futures prices while they last. Visit http://www.tkfutures.com/cotton.htm to learn more about cotton futures and options trading.

The author of this article is a 17 year veteran of the futures and options markets and the president of T & K Futures and Options, Inc. Futures, options and foreign exchange products carry significant risk of loss and only risk capital should be used. Past performance is not indicative of future results. Visit http://www.tkfutures.com/education.htm to learn more about the mechanics of cotton futures and options trading.

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MICHAEL SMITH
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