Omicron has brought us back to the concept of an epidemic or seasonal "flu" with no major impact on the public health of states. 

In such a context, only the exponential spread of inflation worries the nations. The United States has announced that 2021 it has reached 7%, the highest level in 40 years. Europe is not to be outdone, announcing the highest rise in two decades. After long fears of deflation, all economies have now entered the turbulence zone, raising fears of a largescale social crisis, should the loss of purchasing power intensify. Basic necessities are particularly under scrutiny. 

Commodities now appear to be safe havens for arbitraging the risk of hyperinflation. In other words, high speculation and volatility are to be expected on all markets. The strength of all stock markets makes further speculation riskier. Technology stocks have reached such highs (Apple's valuation of 3,000 billion) that a correction is more likely than a new surge. 

The situation in the cotton market is more ambivalent, not only is speculation not abating, but the fundamental data remains a source of contradictory interpretations. The WASDE published this week is no exception to the rule, sending out a number of surprising messages but which do not have a lasting effect on prices, apart from a further reduction in US production due in particular to poor yields in Texas last year. However, the real concerns lie elsewhere: 

- Even though US cotton production and sales have been revised downwards, it is a given that the crisis in the maritime world will limit real exports in a very significant way. If shipments were to continue at this pace until the end of the cotton year (31/7/22), more than 5 million bales sold could not be exported, i.e. almost one third of the crop. 

- Indian statistics were also revised, limiting production but maintaining the theoretical stock built up at the end of last season. However, the domestic market has gone into overdrive and available cotton is becoming scarce. Indian cotton supplies have become anemic and expensive. Indian mills have started to look for cotton on other continents, keeping the pressure on prices. 

- The structure of the financial market is perplexing. How can we explain that nearby shipments are more expensive than later ones while the cotton in stock remains very substantial? How to justify that the December 2022 maturity is 16 USC / Lb cheaper than the July 22? 

The very strong demand in Asia for nearby shipment is preventing physical and ICE prices from falling but stocks should put the market back into Carry as one thing is sure, there will be less cotton shortage this year than containers to ship it.

The US economic outlook influenced the performance of the US dollar which fell sharply back to around 1.15 against the Euro. 

The market should continue to rise in the coming days but is not immune to a correction as there is no shortage of cotton