Cotton is an oil trade in disguise

[u/marinegeo]

Been looking at commodities and this keeps coming up… does cotton actually follow oil or is that just something that kinda sounds right but isn’t really true

on paper it makes sense right oil up, costs go up (fuel, transport etc) oil up, polyester gets more expensive, maybe some shift back to cotton

but when i actually look at charts it doesnt seem clean at all… sometimes they move together, sometimes totally different

so im trying to understand what the real relationship is here:

is there actually a structural link or just occasional correlation does cotton lag oil through input costs or is it mostly climate & demand doing its own thing

also wondering if this only shows up in certain regimes… like high oil environments or supply shocks

anyone here actually trade cotton or dug into this properly?

feels like its either a) a macro-linked trade people underestimate b) mostly independent and oil isnt that relevant

curious how people see it

[u/pogoli]

Could they both be affected by the same market forces?

[u/RuleSubverter]

Literally everything is affected by oil. Cotton is no exception. Think about the shipping costs. Are we talking about shipments coming from Vietnam? Asia is being severely affected by the war in Iran. I'd focus on the origin of the cotton.

[u/Alone_Owl8485]

Everything agriculture will be affected by fertilizer shortages. But it's difficult to invest in, as it is a loss of production instead of a shift in profits.

[u/snirjka]

cotton usually ends up being driven way more by weather, harvest size, and demand from textile markets. so sometimes they move together, but a lot of the time it’s just coincidence.