Reporting Period 20 Oct – 02 Nov 2022
The cotton market experienced a further decline during the reporting period. The prices showed a significant downward trend with only few breathers. At the end of the period under review, the ICE futures recovered slightly. While the December futures contract still quoted 113.29 ct/lb on 01 September 2022, it closed at 75.00 ct/lb on 01 November. The figures are also clearly down compared to the previous year: As of 01 November 2021, the nearest future was unusually high at 119.84 ct/lb.
The sharp decline in prices cannot be explained solely by the usual trend during the cotton crop in the northern hemisphere. Analysts are expecting the cotton demand to drop even more sharply than previously predicted. Their assumption is supported by cancellations of cotton exports with the destination China where about 200 million people are currently affected by lockdowns.
Driven by fears of recession and rising costs, less consumers ordered cotton despite the low prices. The energy cost crisis has constantly been another factor influencing the market, combined with a strong U.S. dollar and high inflation. In response to the latter, the U.S. Federal Reserve was expected to raise the interest rates again on Wednesday. This could slow down the economy additionally, though.