Saturday, June 16, 2012
China's Cotton Order Jolts Market
This article in the June 16 Wall Street Journal informs us that some entity or entities in China "bought close to 94% of the 795,700 bales of the net export sales from the U.S. in the week ending June 7." The purchase was made near the low end of a market that had been falling for some time, down to 66.10 cents per pound earlier in the month. Why would the inscrutable Orientals buy immense amounts of cotton? Two reasons. First, the commodity is cheap and they are the world's largest consumer of cotton. More important, however, is the fact that they have traded electronic pixels that represent slips of paper with former US politicians engraved on them for bales of a genuine substance that will keep for some time and can be used to make blue jeans and bath towels. Their purchase is a multi-billion dollar vote against the continued viability of the US dollar.