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The commodity futures markets known as the food group include two important non-food crops: cotton and timber. Futures contracts on the regulated commodity exchanges are a way to get positioned to trade fibers.

The uses of cotton and timber overlap is some interesting and unexpected ways. The substitution value of these commodities help regulate price movement. For example:

Cotton is not only used for textiles. It is also used by the paper industry. Paper made from cotton fiber is valued because it lasts longer and holds up better over time than paper made from wood fiber.

Timber refers to the wood content of a living tree. Timber is not only used for construction purposes. The wood pulp can also be used for fiber production by the textile industry. Rayon, which is made from wood pulp competes with cotton fiber. 

Fibers can be divided into two categories: synthetic fibers and natural fibers. Natural fabrics are made of fiber that either comes from an animal, a vegetable, or a mineral. The most popular natural fiber in the world is cotton. Synthetic fibers are scientifically made to improve upon naturally occurring fibers. Synthetic fibers are mostly petroleum based. The first truly synthetic fiber was nylon.

This section on the fiber group deals with the cotton and lumber futures markets. Cotton and lumber are both considered soft commodities because they are renewable resources.

If you are interested in getting involved in the commodities markets, click here to contact a licensed commodity broker to discuss market opportunities.

Commodity trading is not suitable for everyone. The risk of loss in trading can be substantial. This material has been prepared by a sales or trading employee or agent of Van Commodities, Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Van Commodities, Inc. Research Department. Please view our Risk Disclosure.

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