Kafka said, "in the struggle between you and the world, bet on the world". This could be a source of inspiration in these times. War has become part of our daily lives with its stream of horrors and unbearable images. No one can say when it will end or what honourable way out will be offered, since mediation has been a long time coming. 

Inflation, driven by the war, is imposing itself on all economies at ever high levels. A two-decimal increase in prices is making all the central banks tremble, especially the FED, which is planning a new rate increase next week. Despite a slight retreat in oil prices, all the indicators are in the red and give rise to fears of a postCOVID recession. 

The pandemic is still in the news, particularly in China where the limited effects of the local vaccine are prompting the authorities to multiply the number of lockdown zones for millions of inhabitants. The economic slowdown in this region is disrupting, if it were still necessary, the freight market where millions of containers remain blocked in Chinese ports, causing congestion in the rest of the world. For the cotton market, the week was mainly marked by a decline that can be explained by : 

• The liquidation of the March 22 on the ICE which forced many short sellers to roll over their position to the July 22. However, this will not be the case at the end of this last deadline of the season. Indeed, the gap between July and December is so wide that it would require paying more than 17 USC/Lb or nearly $375 per tonne without any guarantee of recovery to roll to December 2022; buying time can be expensive... 
• Demand continues to weaken and India is timidly coming to the market despite the exemption of import duty. The slowdown in growth, particularly in China, confirms forecasts of a much larger drop in consumption than the USDA is predicting. 
• The continued rise of the US dollar against all currencies is making the price of imported cotton even more expensive. Many analysts see this increase continuing to approach parity. 

However, in spite of this cloudy picture, this should not weigh too heavily on prices because : 

• Production is expected to decline in favour of food crops to compensate for the effects of the war on Ukrainian and Russian production. 
• The exorbitant price of inputs should limit yields and increase agricultural production costs. 
• The drought in Texas is a continuing concern because if it continues it will limit production to a very low level. The figure of 15 million bales is now being put forward as a US production target. 

In this gloomy environment, we remain confident in the market's ability to maintain current levels as the decline in consumption will be accompanied by an overall decline in production.