Washington, DC — With the first month of the new season behind us, we are starting to get a clearer picture of how production, consumption, and trade will unfold, and there are serious storm clouds on the horizon — or, in this case, no clouds at all.

A lack of precipitation is setting off alarm bells among some of the world's top cotton producers, with China, the United States, India, and Pakistan all suffering from some degree of drought. The USA has already reduced its projections for the 2023/24 season by 550,000 tonnes, and more cuts could be coming.

If that weren't bad enough, major economic factors could come into play as well. Disinflation has taken hold in China, which could result in a host of negative developments, including reduced business revenues, wage deflation, and decreasing investments. From the outside looking in, it appears China is not taking aggressive action to stop deflation.

And even if China's Central Bank takes the necessary actions, perception can sometimes be reality. If people don't believe things are getting better, then they probably won't, no matter what actions the government takes. When consumers start hoarding their cash and postponing purchases, demand for many products — including cotton — will suffer.

Price Projections
The Secretariat’s current price forecast of the season-average A index for 2023/24 ranges from 67 cents to 106 cents, with a midpoint of 84 cents per pound.