Six More Bullish Signs For Cotton ETN

One of the most popular songs from one of Australia's finest exports, AC/DC is “Back in Black.” Well, cotton is white, but it is certainly back with a vengeance after a February tumble that saw the iPath DJ-UBS Cotton TR Sub-Index ENT (NYSE: BAL) slide from over $110 to just over $90.

BAL, one of the more volatile commodity ETNs out there and that's saying something, has been on fire, since rebounding to close over $106 on Wednesday.

Looking at the chart, the February slide is now a higher low. Bullish sign #1. ETF Trends smartly noted that cottons slide was due to a broader market sell-off, not a change in cotton fundamentals. Bullish sign #2.

Various sources recently pointed out that China's domestic cotton production (estimated at 30 million bales) will not be able to meet expected consumption (estimated at 47 million bales). Bullish sign #3.

Even Warren Buffett acknowledged rising cotton prices as having an impact Hanes Brands, which is owned by Berkshire Hathaway (NYSE: BRK.A, BRK.B). Bullish sign #4.

Cotton for May delivery was limit up on Wednesday for the fifth consecutive day and is closely in on the Feb. 18 all-time high of $2.0893 a pound. Bullish sign #5.

Want more? From Bloomberg News: Cotton buyers have purchased more than 80% of the coming harvest from Australia, the fourth-largest shipper, stepping up the pace of advance sales as a shortage pushes prices to a record. Bullish sign #6.

It may hard to be bullish on a triple-digit ETN that has nearly tripled in the past year, but if one is going to feel that way, BAL is the ETN for those sentiments.

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.