Catch a Profit on Falling Cotton

Earlier this week I dished on falling cocoa prices and how that could help margins at Hershey (HSY) and other cocoa-related companies, such as Tootsie Roll (TR). In response, I received an email asking me what other commodities have been falling, and what companies are likely to benefit. Several have been on a downward trend, and these include corn, gasoline, copper, aluminum and cotton.

That last one -- cotton -- had a run similar to that of cocoa, as cotton prices surged in both 2010 and the first part of 2011. A key difference here was that the peak in cotton prices was 37% higher in early 2011 than was the 2010 peak of 168 cents per pound, according to data from the National Cotton Council (see chart below). Similar to the situation with cocoa, that rocket-ship ride in cotton prices caused investor concern about margins, as well as price hikes from companies that counted cotton among their key inputs, such as clothing makers and related manufacturers....491 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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