The initial month of the new cotton season has provided a clearer picture of the anticipated developments in production, consumption, and trade. However, there are ominous signs on the horizon, namely the lack of precipitation and the economic challenges posed by disinflation in China.

The drought is causing concern among some of the world's leading cotton producers, including China, the United States, India, and Pakistan. The United States has already revised its projections for the 2023/24 season downward by 550,000 tonnes, with the potential for further reductions.

The drought is also likely to have a negative impact on cotton consumption, as it could lead to lower crop yields and higher prices. In addition, China's disinflation could dampen demand for cotton products, as consumers may have less disposable income to spend.

The full impact of these factors on the cotton market is still uncertain, but it is clear that the outlook is not positive. Producers, traders, and consumers should be prepared for a volatile market in the months to come.