The situation of the cotton market appears so disconcerting that some people appeal to the wisdom of their grandmother’s, while others look to cabalistic signs that are, to say the least, abstract. 

At this point, let's highlight what is simple and understandable: 

• The climatic situation in Texas has improved significantly and should help reassure farmers to plant cotton. Today, the USDA's forecast of 17 million bales for 2021/2022 looks more achievable. 
• The yarn market is strong and profitable for spinners which should continue to encourage cotton consumption. 
• Demand for cotton in the Indian local market is very strong, leading to a strengthening of domestic prices, whilst allowing stocks to be reduced before the arrival of the new crop. 
• World cotton production should be good or even very good, barring any climatic disasters. 
• The fact that the July contract is now cheaper than the December contract should allow ICE to regain a more traditional balance. However, it should be noted that specs have reduced their positions in the market, as well as reducing open interest which may lead to some volatility. 
• The "need" for inflation to absorb the impact of COVID on global public finances is becoming increasingly evident. 
• The end of lockdowns is gradually being announced in all Western countries, potentially leading to the return of consumption of non-essential products, including textiles.

So why does the market remain so resolutely lackluster? 

The basis for cotton is no doubt strengthening but that perhaps masks a fragility underneath the market. It appears that far from any overheating, spinners are keen to buy cotton to secure a good margin on their yarn. 

At some stage textile consumption will have to recognise the effects of Covid on the industry. What will happen to the textile stocks that remain unsold over the last few seasons? It is difficult to imagine that nothing will change after such a crisis. The current situation looks very much like a windfall effect that could come to an end as consumption is not as sustained as one would expect after 18 months of a global economic shutdown. 

A price range between 78 and 82 USC/lb seems reasonable for the coming weeks with a stable US Dollar around 1.22 against the Euro