NEW YORK (TheStreet) -- While many key commodites such as cocoa and beef are on the rise, one is well below its historical average: cotton.
RealMoney Pro contributor Chris Versace told TheStreet's Brittany Umar cotton prices should continue to decline. The dramatic decline can explained by the enormous inventory buildup. Currently, there are around 100 billion bales of cotton in inventory worldwide, he said.
Furthermore, the U.S. Agriculture Department expects cotton farmers will grow even more cotton this year, increasing their plantings by about 10% from year-ago figures.
But Versace said China is another potential factor. The country has a ton of cotton and will likely begin liquidating it soon, creating even more selling pressure.So who benefits from falling cotton prices?
Mostly clothing companies. Specifically, Hanesbrands (HBI) and Polo Ralph Lauren (RL) should benefit as well denim manufacturers like Guess? (GES), Joe's Jeans (JOEZ) and V.F. Corp. (VFC), Versace said. -- Written by Bret Kenwell in Petoskey, Mich. Follow @BretKenwell
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV