– Reporting Period 22 June – 05 July 2023 –
With weak demand, the ICE cotton futures dropped considerably below the 80-cent/lb mark at the beginning of the reporting period. However, they recovered again later. This roller coaster ride may have been brought about by the holidays in major markets like China and the USA on the one hand. On the other hand, projections regarding area and weather conditions may have been the cause.
USDA estimates on U.S. cotton area were updated for the upcoming season: In comparison to last year with almost 5.7 million hectares, area is estimated at approximately 4.5 million hectares. It has been only a slight reduction from the March 2023 forecast.
After four years, weather experts anticipate the return of the phenomenon El Nino. This might lead to increased drought and heat in cotton areas. Simultaneously, the probability of extreme weather events is raising. Hence, it is expected that El Nino will have an additional negative impact on the supply chains that have already been tarnished by the pandemic and the Ukraine war.
The European market recorded only sporadic movement. The holiday season seems to begin early this year.