Cotton Prices May Move Higher, Here Are A Couple Of ETN Plays (BAL, RJA)
Cotton prices are poised to rise in 2010 as the world's largest growers boost production to meet rising demand. Brazil, the fourth-largest cotton grower, plans to increase cotton production by 13% in 2010 and some analysts believe cotton prices could reach 80 cents a pound in 2010.
Cotton for March delivery hovered around 72.5 cents per pound on the ICE Futures Exchange on Friday. Adding to the bullish tone for cotton, China imported more cotton in October than it did in September.
The ETF Professor recommends taking a look at two ETNs investors can use to profit from higher cotton prices. The iPath DJ AIG Cotton TR Sub-Index ETN (NYSE: BAL) is the only pure play on cotton futures availalbe to U.S. investors. BAL is up about 25% year-to-date.
Another cotton play is an ETN the Professor mentioned earlier this week as play on increasing rice prices. The ELEMENTS Rogers International Commodity Agriculture ETN (NYSE: RJA). According to the ELEMENTS Web site, RJA currently holds 11.6% of its assets in cotton futures, making an ideal way to get cotton exposure while gaining exposure to other agriculture commodities as well.
