Cotton going parabolic.  Corn flying.  I thought we’re in deflation? Combined with China wage pressures,  the days of the “cheap suit” are over. Buy those Christmas sweaters now and expect a margin squeeze for clothing retailers.   Hope the FOMC is tuned in.

The WSJ reports:

Prices have surged 33% since the beginning of the year due to bad weather in China, which is both the world’s No. 1 grower and importer, and the flooding that has washed out Pakistan’s fields. Global cotton inventories are estimated to fall 22% from a year ago as demand outstrips supply, according to the U.S. Department of Agriculture…

The rally has been driven by “panic buying,” said Sharon Johnson, a cotton analyst at First Capitol Group in Atlanta. “Right now, Chinese millers are just trying to find cotton, and there’s very little to be found.”

Speculative investors, or those looking to profit from price moves instead of using futures as a hedge, are piling in. The net number of bullish bets held by funds was 81,336, according to the latest data from the U.S. Commodity Futures Trading Commission released last week. This is more than triple the net long position recorded on July 20, when prices first began to soar.

Long cheap suits, short cotton futures!