📉 COTTON // sweet spot at the countertrend break
Primary short expansion phase
Key Chart (H4)
The trend is short on every major timeframe, and a countertrend break is forming on H4.
As long as the waves are going south on H4, the target fibo levels along with the weekly support at 65.08 are valid targets.
Key Fundamentals
Summary
The global cotton market is under pressure as Brazil has surpassed the U.S. as the top exporter, contributing to excess supply and falling prices. Meanwhile, India faces a production decline, which could provide future price support.
Production Trends
• Brazil’s cotton exports have surged due to expanded acreage and lower corn prices, making it the dominant global supplier (Financial Times).
• India’s cotton production is expected to decline by 7.4% in the 2024/25 season due to excessive rainfall and reduced planted area (Reuters).
Market Dynamics
• Cotton prices have dropped below $0.69 per pound, driven by oversupply and weaker global demand (Trading Economics).
• The U.S. Department of Agriculture (USDA) reports an increase in planted acreage, signaling potential future production growth (USDA).
Bullish Case
• Supply constraints in India could tighten global availability, supporting prices in the medium term.
• Growing demand for organic and sustainable cotton could push up premium pricing.
Bearish Case
• Brazil’s export strength continues to flood the market, keeping prices suppressed.
• Increased adoption of synthetic fibers could reduce long-term cotton demand.