*Posted on behalf of Dr. Aaron Smith. A pdf of this article can be accessed by clicking the title below*
Correlation between Stock Markets and Cotton Futures
By Dr. Aaron Smith, Associate Professor and Charles Martinez, Assistant Professor
Department of Agricultural and Resource Economics, University of Tennessee
Since mid-February, cotton and stock markets have plummeted due to the spread of the COVID-19 virus. The COVID-19 pandemic has reverberated through all sectors of the US and global economies. Probably the most effected of the agricultural commodities is cotton. Cotton is tied closely to global economic activity as, in general, clothing and other apparel purchases are not a necessity and can be delayed, unlike food. For this reason, there is a close correlation between stock markets, such as the S&P 500, and cotton futures (Figure 1). Continue reading →