The end of 2021 was marked by the concept of resilience but also by a sense of optimism. 

Three years after the appearance of COVID19, the world has become accustomed to living with this scourge and is applying barrier measures without much thought. The low danger of the new variant, coupled with a capacity for propagation rarely seen before, even gives some people hope of achieving the famous collective immunity, provided that a new variant does not appear. 

Similarly, the inflationary spiral that is spreading does not seem to frighten, but is fully integrated into economists' calculations and into the prospects for central bank intervention. Structural or cyclical? For the moment it doesn't matter, inflation is taking hold and causing prices of all products, even basic necessities, to rise and should quickly drag down wages and interest rates in its wake. Today the only risk lies in the absence of control of this momentum. 

In such a context, the euphoria of the financial markets at the end of the year is, all in all, logical. Even so, we must expect other jolts whose magnitude could surprise us unpleasantly. 

Our market is also experiencing renewed optimism with prices continuing to strengthen, driven by fundamentals that are trying to keep pace with rising production and logistics costs. 

Harvests on the Indian subcontinent continue to question all observers as they try to explain the firmness of prices as well as the scarcity of product offerings on the domestic market. Logistical problems and reduced harvests have sustained demand in this part of the world. India, Pakistan and Bangladesh are constantly looking for cotton, regardless of price or origin. 

But in such a context, should we believe that the physical market will increase indefinitely? This is doubtful because: 

• Against the backdrop of a persistent pandemic, can demand be maintained without running out of steam? 
• Doesn't inflation risk erode purchase power and therefore consumption? 
• Quantities of cotton could one day swell the stocks of spinners, once shipped. 
• Will the price of synthetics continue to rise while oil prices seem to stabilize and satisfy OPEC members? These attractive prices could then weigh on the upside potential of cotton 
• Can the rise in basis be sustained if fertilizer and freight prices return to more "reasonable" levels? 
• Is the gap between old crop and new crop prices too wide? How can this rapprochement be achieved? Will there be a symmetrical movement, or will there be a simultaneous fall in one and rise in the other? 

It is likely that the fundamentals will continue to strengthen in the coming months while the market will continue to fluctuate around its current pivot price of 115 USC. 

International tensions will also influence the Euro/Dollar exchange rate, but a strong Dollar could penalize international trade.