It's hard to be enthusiastic in a market that has lost nearly 8% of its value in a week. 

It started well with an encouraging WASDE report, forecasting lower carryover stocks and higher exports for this season, all against a backdrop of lower US production. Projections for the new season were less promising but their impact was mitigated by climatic uncertainties. 

However, welcome rains in Texas and a disappointing US export report were enough to dampen hopes of a rise in the cotton market, as in other agricultural markets. 

The attitude of investment funds should also be highlighted, as it seems that their long positions have been reduced. 

Is the party over and should we expect the dark days to return? 

The first elements of the answer are technical: 

• Fixing of still open contracts indexed to the July 2021 maturity should intensify to take advantage of the current decline and support the market. 
• The gap between the July and December 2021 maturities should continue to narrow. 
• The very high volatility of prices has a strong impact, particularly on options, the cost of which continues to rise.

On the fundamental side, the situation is not much clearer: 

• Will cotton acreage continue to grow if the market decline intensifies? 
• The decline in other agricultural commodities limits any fallback solution for producers. 
• How reliable are consumption figures when part of the world is still confined and global consumption of textile products is slow to recover?

The real question today is who will benefit from the reshuffling of the cards that we have been witnessing for several months: 

• Australian cotton has seen its basis fall by 80% since China decided to drastically reduce its imports. 
• The United States should continue to export at the current rate, although the market is becoming more competitive 
• Will West Africa be able to continue to play in the big league despite rising production costs and ever longer shipping and transport times to Asia? 
• Brazil, which is becoming increasingly competitive, should rapidly become the benchmark. 
• What will China's attitude be in such an environment? The latest demographic census shows a population of 1.421 billion inhabitants who will have to be fed and clothed with an improving purchasing power...

All these questions have the merit of showing that COVID is not the only obstacle on the road to cotton. We are living in turbulent times with rising interest rates, and the rains in Texas are not the be-all and end-all.