Fortress Global Enterprises Inc - Class A FTPLF

RE: Cotton price

[OptsyEagle]

It's not going to help.  I believe the drop is most likely on speculation of lower prices in the future from higher estimated supply, not the actual lower prices or higher supplies actually happening.  There is a difference.

In any event, translating the proper price of Fortress Paper stock to the price of cotton is near impossible.  We don't know how much increased demand for rayon is coming from cotton.  We also don't know the exact price for dissolving pulp is built into FTPs current price, although from the analysts that have indicated, I would imagine the average is between $1,200 and $1,600 per tonne.  So we have a lot of room to fall back here before it may have any effect of FTP.  We don't know the exact relationship between DP prices and Cotton except that they have some degree of correlation.  We also know that DP prices have other things effecting it, beyond cotton pricing. 

That being said, when cotton prices are going up, we know that it can't hurt but again, have no idea of the degree of benefit.  The same is ture when they go down.  We do know that Thurso is one of the lowest cost producers of DP and any new capacity will be in the lowest quartile of costs or it will not come on at all.  We know FTP has long term pricing contracts to protect it against fluctuations in pricing.  We know that FTP is currently undervalued when compared to those long term contracts.

I watch the price of cotton myself but even when it was rising I knew it would tell me very little about the future direction of Fortress Paper's stock.  I wish it did.