Cotton, prices are affected by a wide array of factors ranging from the normal changes of supply and demand to political and economic events that disrupt established market flows and alter the price formation mechanism. The world cotton market is sometimes regarded as a more transparent market when compared to other commodities since distortions have been maintained in a relatively stable manner over time. Therefore, changes in international cotton prices over the past two decades could be explained with acceptable degrees, of accuracy with inverted demand and supply equations as proposed by traditional price theory. However, over the last two years unexpected events have altered price formation and expectations about future prices seem to be playing an increasingly important role.