Tongzhou Cotton Market Brief, Week 5, March 2022
I. Zhengzhou Cotton
(I) Positive Factors
1) The strong rise in US cotton has a boosting effect on Zhengzhou cotton.
2) As May approaches delivery, the basis has recovered, and futures are gradually converging towards spot prices.
3) The inventory of raw materials for yarn and cloth mills has decreased month-on-month. The inventory of raw materials for cloth mills has fallen to the lowest level for the same period in history, resulting in restocking at low prices.
(II) Negative Factors
1) The recent outbreaks of the epidemic have severely affected production and operation activities and logistics transportation.
2) Orders from yarn and cloth mills have not yet improved, and downstream customers are not actively purchasing.
3) High cotton prices are completely unbearable for downstream industries, resulting in immediate losses and lack of production motivation.
4) Ginning mills are actively seeking buyers, and some companies are selling at low prices.
II. US Cotton
(I) Positive Factors
1) In the week of March 17, US cotton shipments reached 101,700 tons, the highest for the same period in history.
2) Drought conditions in the US and Texas have not improved.
3) In terms of price comparison, Indian cotton and Brazilian cotton are more expensive than US cotton. However, in terms of global purchasing, US cotton still has a competitive advantage.
4) Since the Russo-Ukrainian war, US soybeans and corn have risen sharply. From the perspective of agricultural product price comparison, the competitiveness of cotton is declining, and the planting area announced at the end of March may be lower than expected.
5) As of March 18, the unpriced volume of May US cotton futures contracts still amounted to 38,000 contracts, which is the highest for the same period in history, and the high on-call volume suggests the possibility of a squeeze.
(II) Negative Factors
1) From the perspective of the end market, the inventory-to-sales ratio of clothing for US wholesalers is at a historical high, and the subsequent momentum of end-market consumption is insufficient.
2) Southeast Asian countries are facing worsening profits due to rising raw material costs, resulting in reduced orders and an inability to absorb the high cotton prices in the downstream market.
3) Global cotton production in the 2022/23 season has increased, with Brazil and Australia increasing supply by approximately 1 million tons.
Summary: The recent rise in Zhengzhou cotton is mainly due to the boost from overseas markets. There are no positive factors in the industrial sector; the operating rates of yarn and cloth mills have further decreased, and inventories are accumulating to the highest level for the same period in history. US cotton is mainly affected by high on-call volumes and the game between funds and net longs. From the industrial sector perspective, US cotton shipments have significantly improved; shipments reached 100,000 tons in the week of March 17, and drought in Texas remains severe. However, from the perspective of end-market consumption, wholesaler inventories are at a high level, and there is a lack of momentum in end-market consumption. Global downstream consumption is gradually weakening, but the main contradiction recently focuses on the market game of funds. Therefore, the possibility of a decline in cotton prices in the near term is low.
Points to Watch: US cotton planting intentions report at the end of March
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.
Contact
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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