There seems to be no respite as we approach the end of 2020, the Virus mutation that has appeared in the United Kingdom seems to have rung alarm bells as we head into 2021.
The cotton market has started the week on a very bearish note despite yesterday's vote in the US to approve the 900 billion dollar stimulus package, which had been long awaited.
What can we make of this third wave of the pandemic, which appears to be spreading throughout the world, when the second wave had not yet been contained?
After waiting for masks and tests, thinking they would perhaps be the remedy, we are now waiting for doses of vaccine of which the effects that are not yet fully known. How effective is it and for how long will it provide immunity? Difficult to say, but there is no other known alternative to date.
The cotton market was looking rather enthusiastic perhaps even euphoric at the end of the year:
- The latest WASDE has reduced production figures, whilst increasing consumption, which had provided some market stability.
- Better containment measures implemented around the world, which allowed for a less harsh economic slowdown over the course of the second wave.
- The mountainous stocks of Indian cotton have been sold well and at a good pace by the CCI, which continues its policy of buying at a very attractive Minimum Guaranteed Price.
- Hedge funds, far from deserting ICE, are maintaining their long positions, showing their optimism for a further rise in prices.
- The reduction in cotton areas planted next season should help stabilise prices further.
The resurgence of the virus, especially in a mutant form, is expected to weigh heavily on prices and economies. In such a climate, the market has a strong chance of ending the year below 70 US cents per lb, with the prospect of a year 2021 like 2020….
Πηγή: Mambo