Far from being a passing episode, COVID is now a universal part of our daily lives. The emergence of a new variant is disrupting our lifestyles and shaking the world to the rhythm of contamination. 

The spectre of a new 2020-type backlash is on everyone's mind. However, all the stock markets, after having reacted strongly, are tending to recover. In this context, the cotton market reacted quite well. Far from collapsing, the ICE has above all confirmed the end of the December 21 deadline by allowing a salutary decongestion and a reduction in the speculative position which is still massively long. The funds have clearly not yet decided on the strategy to follow:

•  Maintain and increase the position to take the market to higher levels 
• Reverse the position to take a net short position and bring the market back to around 70 Usc/Lb pocketing the difference in the process. The answer probably lies in the fundamentals: 
• Cotton continues to sell well on all markets, yet the shipping crisis is delaying shipments beyond reason. The US figures are convincing: only 74,500 bales could be shipped when more than 400,000 would be needed to meet the USDA's export projections. We can already estimate that the figures will not be reached as the freight crisis seems set to last. 
• Fixed price sales have decreased on the upcoming deadlines, which could be very disabling in the event of a sudden drop in prices, but reassuring for a market that has been dysfunctional for months due to the extent of these pending fixations. 
• Sales by the Chinese reserve ended with a lower than expected volume. In addition to the replenished stocks, an increase in imports can be expected to satisfy the unabated demand. 
• The drop in prices has reinvigorated demand even though the level of deals being done is decreasing as price levels balance out between buyers and sellers. 

This week the monthly WASDE report will be released, which is not expected to have many surprises and will support the balance between supply and demand for this season. The only unknown remains the carryover stock. Indeed, if the cottons cannot ship, the end-of-season socks could weigh on the new season. 

Fertiliser prices have continued to rise to record highs, raising the risk of a scissor effect on the next season.

The US dollar has lost some ground, which should quickly be made up. 

105 Usc/Lb is a new pivot on which we could consolidate in the weeks to come.