'Knowing the Numbers' Isn't Always Enough

摘要

Even people who have spent most of their lives in the cotton trade were baffled by recent volatility. The most interesting part is that there were no sudden surprises in demand and supply, except for one country deciding to put quantitative restrictions on its exports — an act that contributed to a quantum leap in prices. The top five producing and consuming countries play an important role because any change in demand and supply numbers - whether due to weather conditions like floods in Pakistan orgovernment intervention in India — can change the whole game. This market often acts in ways we never expected. Knowing the numbers and the data is not always sufficient to assess the direction of prices. The volatility of prices in the physical tradeof cotton in Pakistan during 2011 is unlike anything we've ever seen. There are limit locks in the futures exchange, which ranged from 400 to 700 points per single session during last year's peak prices; beyond those limits, trading is suspended.