Will the India/Pakistan Conflict Push Cotton Prices Higher?

The Commodity Report #205

*YTD our absolute return strategy is up 10,2%

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Will the India/Pakistan Conflict Push Cotton Prices Higher?

India is an important exporting and producing country of cotton. According to the latest USDA data, India is the second-largest cotton producer behind China.

Meanwhile, India is exporting only a smaller share of its produced cotton.

If the conflict between India and Pakistan should continue to worsen, this could put some upside pressure on the price of cotton futures.

The situation becomes even more interesting if we take a closer look at the net long position that commercials have built over the last months.

Fundamentally, a situation is brewing where a long trend reversal in cotton futures becomes interesting to us and our portfolio. Now we need to observe the price action as well as the forward curve for signs of a reversal setup.

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This pattern could take some additional time to form because there is definitely no tailwind by seasonals. Cotton futures usually experience some headwinds during the months April to July.

Source: InsiderWeek

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In Other News…

Between 2020 and 2023, China accounted for 70% of U.S. rare earth imports, making it by far the country’s top supplier. Malaysia, Japan, and Estonia round out the top four, according to data from VisualCapitalist.

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This week, look out for the following:

• CPI data on Tuesday

• Empire State Manufacturing Index, Philly Fed Manufacturing Index, Retail Sales data and PPI data o Thursday (what a day for data nerds)

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Till next Monday, Lukas

If you have any questions in the meantime, please feel free to contact me via X or Mail.

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