Despite the umpteenth wave of COVID, resilience seems to be the order of the day on all continents except China, which remains obsessed with its Zero COVID policy. But the sharp slowdown of the economy in there could lead the authorities to be less rigorous in the measures to be taken to curb the epidemic. In the rest of the world, containment is, for the moment, relegated to the past so as not to overlap crises. 

The real danger lies in the situation caused by the war in Ukraine which is dragging on all fronts. The deluge of bombs does not stop, nor does the economic outlook improve. 

For the moment, let's try to keep a resolutely optimistic view of the situation: 

• Prices of, almost all commodities, have fallen, led by oil, to levels more acceptable to the economic situation. 
• Talks between Turkey, Russia and Ukraine seem to be well underway to find a solution for exporting Ukrainian grain through the Black Sea. 
• The black spot remains the price of gas, which risks splitting the good agreement within Europe. 

The United States has agreed to "go to Canossa" in order to crack OPEC's decision not to increase oil production, but probably also to allow Iran's return to the oil scene to be accepted. It is not certain that Israel and Saudi Arabia would look favourably on an Iran enriched with both oil and uranium. 

The situation should also change in Venezuela for the same reasons. 

The COVID and the war have definitely sounded the death knell for the WTO agreements. After globalization, we should now have a real regionalization that would work by block. 

The speed with which the FED has raised rates has provoked a "spread war" and a dizzying rise in the US dollar against all currencies. The ECB, constrained by the economic distortions within the Eurozone, is reluctant to do the same, working primarily on an "anti-fragmentation" tool to avoid an implosion of the Euro. 

In such an environment, the WASDE published last week by the USDA, despite a correction in production, had little impact on cotton prices, which continued to plummet. Today, the fundamentals are no longer in the picture. Fears of a generalized recession are weighing on all players in the sector and are weakening any market recovery. 

All in all, the most remarkable figure remains the position of speculation which, after having brought the market to its pinnacle, has decided that it was time for it to fall. The combination of crop arbitrage and bearish speculation caused an earthquake of great magnitude (more than 40% drop in the market). 

However, it is difficult to find bales of cotton to sell for nearby shipments and there are few offers for new crops at origins where the cost price of a bale of cotton has exploded. 

As a matter of facts, our view remains decidedly optimistic even though the recession is upon us. We were too quick to believe that the strong post COVID recovery would last forever, but that is not the case.