The dollar fluctuates with every ceasefire and rumor of an end to the war. The economic outlook is darkening against a backdrop of rising oil prices, which are currently contained but risk settling permanently above $100 if infrastructure in the Persian Gulf is permanently damaged. 

he same applies to inputs, whose prices have been rising steadily since the start of the war. The skyrocketing cost of fertilizers is having a direct impact on farmers worldwide, who are seeing their production costs soar. The pressure on all agricultural commodities is palpable, and cotton is no exception. 

Prices are rising steadily, a trend that is expected to continue in the coming weeks: 

• - Rising costs of inputs, electricity, and transportation are driving up production costs. 
• - Consumption outlook remains stable, and rising oil prices are driving up the cost of synthetics; 
• - The closure of the Strait of Hormuz is limiting oil supplies for synthetic fiber production and hindering exports of these fibers from Gulf countries; 
• - Rising freight costs are further limiting exports; 
• - Speculators are reversing their bearish stance and adopting a wait-and-see approach 
• - Demand remains strong, and the yarn market is picking up. 
• - …

The latest ocean temperature readings confirm warming, which points to the possibility of an El Niño event that could affect all crops in both hemispheres. 

We will now need to monitor the harvest situation by product to first determine the actual areas planted and the crops sown The risk today lies in two aspects: 

• - The impact that inflation will have on household consumption, particularly of textile products, which are by nature non-strategic 
• - The physical long positions held by traders, who have been anticipating a sharp rise in prices for several months.

In keeping with the famous adage that “you don’t piss against the wind,” we remain reasonably optimistic about the medium-term outlook for our market.