Russia declares a war on Ukraine, and the bulk commodity market performs differently. As the two countries’ cotton production and consumption takes a small proportion in global cotton market, the direct influences on cotton market are supposed to be limited, more reflecting on textile and apparel import and export. In medium term, cotton market will still return to own fundamental change.
1. Cotton prices edge up with Russia-Ukraine war
After months of escalating conflicts between Russia and Ukraine, the Russian President, Vladimir Putin, has ordered a special military operation in Ukraine’s eastern Donbas region on Feb 24. Many Ukrainian military facilities are damaged, and the commodity market experiences a large fluctuation. However, the sectors with larger increases are mainly oil, polyester, fodder, petroleum, agricultural products, etc. Although cotton price has stabilized and rebounded, the increase is relatively small.
2. The direct influence of the war on cotton market is small
Based on the USDA’s global cotton supply and demand, the cotton production and consumption of Russia and Ukraine takes a small proportion, having limited impact on cotton directly, more on the textile and apparel import and export.
Nevertheless, due to the disparity in military and national strength between Russia and Ukraine, the duration of war may be short. The influences are mainly reflected on the international relation change, on the import and export and the energy of the two countries. In short, cotton market may be driven by the market sentiment, but in medium term, it will return to own fundamentals.
Source: ccfgroup.com