China is the world’s biggest importer of cotton and the top exporter of clothing and textiles. China imports around 25% of its entire cotton needs and that is mainly from the US. However, a strong USD and concerns over a slowing global economy have hit cotton futures markets this year. Furthermore, there are expectations of a bumper China crop that could further weigh on prices.

Global slowdown expectations have been hindering cotton prices this year with significant falls of over 40%. However, the seasonals are very strong for cotton right now, so if there is a sudden reason for demand to pick up keep the following pattern in mind.

Notice how, over the last 15 years, between November 23 and December 31, cotton has gained 13 times for an average of 4.91%.

Major Trade Risks: The major trade risk here is that China has a widespread Covid outbreak which reduces demand for cotton.

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