The American secret services predicted that the war in Ukraine would result in the death of 50,000 civilians. The images of devastation, destruction and violence of all kinds make us fear an even darker reality. 

The specter of hyperinflation continues to weigh on the economy despite increasingly radical interventions by central banks. But the balance is precarious as the risk of recession is so great. Some commodities, such as oil and palm oil, have seen their prices fall. Cotton has also taken a breath without any major change in outlook: 

• “On Call” contracts represent nearly 1.7 million tons spread over the May and July 2022 maturities. Spinners are trying to postpone the fixings until the Greek Kalends to avoid being "stuck" with an overpriced cotton. Some are considering rolling their positions to the new crop. 
• Investors, for their part, have started to take profits, which has mechanically pushed the market down in value and volume in "Open Interest". 
• For the first time this year the spinning mill is not making money by buying raw material at the current level. This lack of profitability explains the decline in the physical market during the last week. 
• Demand is much less sustained in both India and China where only institutional buyers are active. 
• On the US side the situation is even more complex as the latest USDA weekly export report showed: 
  • Sales have dropped significantly to a very low volume this week. 
  • Cancellations are multiplying: the opportunity for some operators in a depressed yarn market to cash in on the 10 or even 20 USC/Lb market difference may seem tempting. 
  • Shipments are still too low to reach the required level of projections, unless there is a significant increase in the space available on vessels. To date this seems to be wishful thinking on all continents. 

The monthly supply and demand report (WASDE) has only marginally changed its projections from the previous month. However, the outlook for the new crop is getting dimmer: 

• The looming recession is expected to impact the textile industry as a whole. 
• The extension of US sanctions to Russian and Belarusian fertilizers and all the major owners of these conglomerates suggest that prices will remain at ever higher levels. The scarcity of certain products raises fears that other major input producers will be impacted far from the conflict zones. 
• The drought in Texas is expected to continue and reduce US production. 
• Cotton acreage is expected to face competition from food crops, whose prices continue to rise. The fear of a return of "hunger protests" puts moral pressure on every farmer to meet the primary obligation to feed the world's people. 

In summary, although the market is expected to continue to stall, the outlook for the new crop should allow it to hold up while basis could decrease.