This cotton ETF is all about cotton and clothing. Cotton has many applications but of course the use in clothes is the most important one. Cotton comes from the cotton plant and it is very vulnerable to diseases.
Crop protection is a major issue in the cotton industry. Another issue is climate, a season that is too wet or too dry has a sure impact on the crop. All these possible drawbacks may cause cotton prices to soar, sometimes over 400% in a 2-year period.
As with basic materials here too many speculators are active that may drive prices up or down more strongly than the market itself would be able to. If the first rumors appear that cotton harvests may fall short these speculators get in to this cotton ETF.
The combination bad harvests-speculators will cause prices to skyrocket. Eventually these speculators get out when they have reached their goal or crops will be better than predicted and the prices fall back again.
Getting in a cotton ETF timely when prices are low and exiting at a safe point before the collapse will be the name of the game here. You do not have to be a farmer or even know the ins and outs of cotton.
All that it takes is to be a good trader and having the right feel for the market and understanding the actions of the other participants.
ETFS Cotton ETF
This ETF Securities Cotton ETF is tracking the Bloomberg Cotton Subindex.
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ETFS Cotton ETF info:
ETF provider: ETF Securities
Exchange: Borsa Italiana
This ETFS Cotton etf has quotations on different exchanges and is known under several ticker symbols. As long as the ISIN number is identical you are dealing with the same ETF.