Tongzhou Cotton Market Brief, Week 3 of July 2022
I. Zhengzhou Cotton
(1) Positive Factors
1) Last Friday, a central government leader visited Shihezi City in Xinjiang to inspect cotton fields, triggering market expectations and temporarily easing pessimistic sentiment. The market speculates that subsequent reserve policies may become a powerful tool to stabilize the market.
2) The current main contract of Zhengzhou cotton is 15000, which is below the five-year average of 16000. The current price has excessively priced in the negative fundamental factors, and after the oversold rebound, it should return to the vicinity of the mid-valuation.
3) As cotton prices continue to fall, the immediate profits of downstream spinning mills have become quite considerable, and spinning mills have the motivation to produce.
(2) Negative Factors
1) Currently, domestic consumption is sluggish, and spinning mills and textile mills are still in a state of no orders. The pattern of downstream reduction of production capacity and accumulation of inventory remains unchanged.
2) The sales progress of Xinjiang cotton is slow. With the sharp drop in cotton prices, the sales progress in Xinjiang has slowed down again. As of July 7, the sales progress of Xinjiang cotton was 61.2%, down 38.2 percentage points year-on-year.
3) The overall growth of the new crop is good, and the yield per unit area is likely to increase next year, and the supply side will remain ample next year.
II. American Cotton
(1) Positive Factors
1) The deterioration of drought in the United States is still intensifying. The severe drought rate in Texas rose from 66% to 75%, and the weather premium remains.
2) The ending stock of US cotton in the 2022/23 season was 520,000 tons in July, which is the historically lowest ending stock. The inventory-sales ratio has been adjusted to 14.5%, the lowest in twenty years.
3) The production cost of American cotton has a certain reference significance for the price. American cotton fell below 88 US cents, and there is certain support below.
(2) Negative Factors
1) US inflation in June was 9.1%. Faced with absolutely high inflation, the Federal Reserve can only curb inflation by continuously raising interest rates and shrinking its balance sheet. The environment of tightening macroeconomic liquidity remains unchanged.
2) US textile and apparel retail sales turned down in June, with a year-on-year growth rate of -0.25%. This proves that US terminal consumption has lacked momentum.
3) The risk aversion sentiment of funds is strong. In the week of July 12, the net long ratio of funds decreased by 5 percentage points.
Focus: Reserve policy
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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