The meeting between Presidents Xi and Trump served no purpose other than to reinforce Beijing’s leadership role on the world stage. All concessions made were minimal, whether regarding a vague and ambiguous agreement to purchase agricultural products from the U.S. or the meager order for Boeing aircraft. It must be said that expectations were high, no doubt commensurate with America’s isolation. 

No agreement is in sight to stabilize the Middle East, where Shaheb drones continue to sow terror among Iran’s neighbors and where the determination to stand up to America is expressed in stalled diplomatic talks. Meanwhile, oil prices continue to yo-yo, to the great benefit of certain individuals in the White House’s inner circles, who take advantage of the situation to speculate in response to President Trump’s interventions. 

But Chinese support for putting pressure on Iran likely came at the cost of a degree of renunciation of the Americans’ unwavering support for Taiwan. The price seems disproportionate, but it is undoubtedly the price to pay to prevent a third front—this one in the South China Sea—from emerging. For many of us forget that the primary conflict remains the Russia-Ukraine war, which is sinking a little deeper into all-out war every day. The lack of interest in this part of the world has paved the way for an intensification of the fighting, with Moscow now being targeted by Ukrainian drones. 

Dash of hopes at the highest levels has led to a rise in oil prices and a collapse in cotton. Indeed, all it took was a collapse in U.S. export sales for the “death knell” to sound on our market. 

Last week we mentioned the slump in demand and the narrowing of basis (the difference between the ICE price for a given delivery date and the selling price). Spinners are still hesitant to take a position today, while producers feel they have missed out on a lucrative sales opportunity. But does this mean we should now sound the alarm? 

This seems largely premature to us, as demand is beginning to emerge again from the Indian subcontinent (Bangladesh, India, Pakistan). In this regard, it is worth noting that Indian CCI prices for this season have been raised and that the MSP (minimum support price) was increased by 7% last week. The strength of the CZCE in China is also a sign of supply tightness.

Furthermore, temperatures remain a concern around the globe, while at the same time an El Niño phenomenon will be with us through the summer. 

Finally, technically speaking, ICE likely needed a breather to stabilize between 82 and 85 US cents/lb.

 All eyes are now on Jerome Powell’s replacement at the Fed. Just confirmed by the U.S. Senate, Kevin Warsh—whose first steps will be closely scrutinized—will he, as President Trump hopes, have the necessary leeway to cut key interest rates as inflation begins to rise again?