Tongzhou Cotton Market Brief, Week 2 of March 2022
I. China Cotton
(1) Positive Factors
1) Xinjiang cotton alliance restarted, proposing to provide unified pricing for spinning mills and traders, indicating a strong willingness of the production side to maintain prices.
2) Spinning mills indicated that the minimum acceptable price is 22000, and after deducting the basis, the market has support at 20500.
3) Crude oil hit a new high again due to geopolitical reasons, and most agricultural products continued to rise.
4) The support of production cost remains effective.
(2) Negative Factors
1) The downstream market remains sluggish, and spinning mills and textile mills have weak replenishment intentions, mainly driven by rigid demand.
2) Recently, clothing companies have successively held autumn and winter clothing ordering meetings, but the increase in clothing orders is not obvious, and the market still lacks long-term orders.
3) Enterprises in Zhejiang that produce export orders reported that due to the increased boycott of Xinjiang cotton by the United States, export orders have been severely lost.
4) As of February 24, the sales progress in Xinjiang was 34.7%, which is 35.3 percentage points lower than the same period last year and 17.9 percentage points lower than the average.
5) Terminal clothing orders are poor, sales are only half of previous years, and most people are not optimistic about the future market.
II. US Cotton
(1) Positive Factors
1) The drought situation across the United States continues to intensify, with severe drought in Texas worsening compared to the previous period.
2) As of March 1, the net long position of funds rose from 38.1% to 38.4%, and the net long position of non-commercial traders increased by 1561 contracts to 91828 contracts.
3) As of the week ending February 25, there were a total of 140,000 contracts of unpriced US cotton, which is at a historically high level for the same period.
4) The shipment volume of US cotton has significantly improved in the past two weeks, with 82,800 tons shipped in the week of February 24. As the cheapest cotton globally, global purchases and shipments of US cotton will increase once logistics problems are resolved.
5) The sharp rise in crude oil has boosted the sentiment of the entire bulk commodity market.
(2) Negative Factors
1) Macroeconomic liquidity tightening is imminent. Powell mentioned in Wednesday's hearing that a 25bp interest rate hike in March is appropriate, and Canada announced a 25 basis point interest rate hike last Wednesday.
2) Downstream demand in Southeast Asia continues to weaken, orders are deteriorating, yarn prices are falling, and Indian spinning mills have turned to negative profits in the spot market.
3) The planting area of US cotton in 2022/23 is 5.14 million hectares, an increase of 13.2% year-on-year.
Summary: The Russia-Ukraine conflict has driven up oil prices, boosting the sentiment of global bulk commodities, and cotton prices have also fluctuated with crude oil. The sharp rise in crude oil has enveloped the world in an atmosphere of inflation. Regarding the contraction of global liquidity, Canada announced a 25 basis point interest rate hike on Wednesday, and Powell mentioned in Wednesday's hearing that a 25bp interest rate hike in March is appropriate. In terms of cotton fundamentals, demand is deteriorating both domestically and internationally, with no sign of improvement, and Indian spinning mills have turned to negative spot profits. As of February 24, the sales progress in Xinjiang was only 34.7%. As cotton futures continue to fall, cotton ginning plants may accelerate sales to reduce losses. However, the rise in crude oil prices, high unpriced contracts, and net long positions of funds still provide upward momentum for cotton prices.
Focus: Russia-Ukraine conflict Spring/Summer orders
Leaders from Xiamen C&D Group visited Tongzhou for investigation and guidance
On March 3, Wang Yongqing, Vice President of Xiamen CNOOC Group, visited Tongzhou Group for investigation and guidance. Wei Gangmin, Chairman of our company; Huang Hongyu, President; Li Tao, Vice President; and Zhang Zhiyan, Director of the General Office, met with and participated in a symposium.
Tongzhou Cotton Market Brief, Week 1 of March 2025
1) This week's National People's Congress and the Chinese People's Political Consultative Conference (NPC & CPPCC) in China boosted market expectations for steady growth. In February, the Purchasing Managers' Index (PMI) for manufacturing stood at 50.2%, up 1.1 percentage points from the previous month, indicating a significant improvement in the manufacturing sector.
In 2024, China's dyeing industry saw rapid export growth to ASEAN and RCEP member countries, exceeding the overall export growth rate. However, this growth was accompanied by a decline in prices. From January to December, China's exports of eight major dyeing products to ASEAN totaled 7.908 billion meters, a year-on-year increase of 12.14%, 4.61 percentage points higher than the overall export growth rate, accounting for 23.58% of total exports. The average export price was US\$1.19 per meter, a year-on-year decrease of 2.75%, 0.64 percentage points lower than the overall decline. Exports to RCEP member countries totaled 8.431 billion meters, a year-on-year increase of 11.35%, 3.82 percentage points higher than the overall export growth rate. The average export price was US\$1.17 per meter, a year-on-year decrease of 2.79%, 0.60 percentage points lower than the overall decline.
On February 28, Mr. Huang Hongyu, President of our company, was invited to attend the 2025 Zhangjiagang Cotton Industry Development Conference and, as a guest speaker at the "Xiangshan Roundtable," shared his views on the cotton market and trading opportunities.
Henan Tongzhou Cotton Industry Co., Ltd.
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Henan Tongzhou Cotton Industry Co., Ltd.
Address: 10th Floor, Henan Nongxin Building, No. 19 Commercial Outer Ring Road, Zhengdong New District,Zhengzhou, China
Tel：86037165836206
Email：tongzhou@tongzhoucotton.com
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