While many traders primarily focus on resources like gold or oil, there are plenty of other opportunities in the commodity space. One such opportunity lies in cotton, which can be found in almost every textile product around the world; but as a soft commodity this constant demand does not always translate into consistent returns. The fluffy crop has enjoyed a strong start to 2013, but is well known for its large movements from day to day and for keeping investors on their toes [for more cotton news and analysis subscribe to our free newsletter].
While many commodity investors and traders primarily focus their attention on larger natural resources like gold or oil, there are plenty of other opportunities in the space; one of them lies within the soft commodity of cotton [for more commodity news and analysis subscribe to our free newsletter].
Cotton has gotten plenty of attention from investors in the textile industry recently. Last year, the soft commodity suffered significant losses, surrendering just under 13% on the year. This year, however, rising demand from China has the bulls lining up to place bets on what they believe will be a great year for cotton [for more commodity news and analysis subscribe to our free newsletter].
This past year has certainly been a volatile one for the commodity space, but the majority of these assets has been able to net a positive return on the year. Lumber and soybeans led the pack, as each appreciated more than 35% for the year. But bringing up the rear are a few commodities who are no strangers to volatility and weak performances. Below, we outline the five worst performing commodities of 2012 to give investors a better idea of how the year shaped up [for more commodity news and analysis subscribe to our free newsletter].
As markets prepare for another four years of Barack Obama, it is safe to say that trading has been anything but smooth. With most benchmarks suffering a poor string of sessions last week, many are looking to the near-term or have focused on exactly what happened last week. But with commodity investing, it is always important to take a look at longer-developing trends, as they can often signal how a particular asset will perform in the near future [for more softs news and analysis subscribe to our free newsletter].
Simply put, cotton makes an appearance in the daily lives of almost every population around the globe, as this commodity is used in a wide variety of textile products. Since global consumption patterns dictate the fluffy commodity’s movements, cotton prices are known to exhibit volatility, making a trade in cotton a potentially lucrative opportunity for investors and traders alike. Additionally, cotton has been shown to maintain a fairly low correlation to other asset classes, such as stocks, giving investors yet another option to add meaningful diversification to their portfolios.
The world of commodities was not accessible to most average investors just a few short years ago. But today, there are exchange-traded funds that allow investors to gain exposure to many commodities, both as an asset class and as a way to participate in the movements of an individual commodity, even rather obscure ones, without a futures account.