Still, for all its pervasiveness, investors don't talk much about it. Wheat, corn: those are daily news. But cotton? You may see a one liner market report in the Wall Street Journal's, but do you really pay attention? Probably not.

But you should.  Because if you're in one agricultural commodity, like corn, it pays to see what the other crops are doing, because they're all, dare I say it, interwoven. 

Remember all that corn that was planted in June? Remember all the talk about how it was reducing the available acreage for wheat and soy? Well, cotton competes for some - but not all - of that farm land too. In fact, between the increased corn prices and Mother Nature playing fast and loose with the rain in the Southwest, cotton saw its lowest plantings since 1989/90: about 11.1 million acres.

The USDA's Economic Research Service's July 13 report, Cotton and Wool Outlook, has the subtitle: "World Consumption Overtakes New Supplies of Cotton." Between rising consumption (t-shirts for everyone!) and falling U.S. production, there's a 7 million bale deficit expected for 2007/08. There hasn't been a deficit since 2003 and nothing this large since 2002.  

High consumption, lower plantings - both sound reasons behind the 13 percent rise in cotton prices this year.

As for where it stands now, Bloomberg points out that most grains are doing well. Wheat is up (3.2 percent yesterday) because of weather conditions in Europe and Canada. Corn rose 2.1% because farmers might plant more wheat. All of which leads to the speculation that, with the grain boom, less cotton will be planted. And given the supply/demand outlook, cotton prices did the expected and rose.

Soft's are tricky. Soft's have gotten trickier as soy and corn have migrated from pure supply/demand driven staples dependant on farmers and weather to mixed-use energy commodities with a significant hype and perception component involved in their price movement. Cotton can be an interesting way to counteract the hype - the supply and demand dynamics are more pure, while the puffy white stuff can play somewhat off of the corn hypehype. 

If you want to play, check out the futures on NYBOT and consult the Farmers' Almanac, and you too can get in on "the fabric of our lives."

Cotton Gains Most in a Week as Grains Rally, Dollar Weakens Bloomberg.com August 8, 2007 16:20 EDT

Cotton and Wool Outlook USDA, EIA July 13, 2007