Tongzhou Cotton Market Brief, Week 1 of August 2022
I. China Cotton
(1) Positive Factors
1) The US interest rate hike in July has been implemented, and August is temporarily in a policy vacuum period. The domestic and main stock markets have stabilized and rebounded. If there is no major negative macroeconomic news in the near future, the main stock market will remain firm, supporting cotton prices and preventing a sharp decline.
2) Recently, autumn and winter orders have gradually been placed, and the production and sales rate of yarn mills has improved. In the future, due to order placement, downstream operations will improve compared to the previous period.
3) Currently, the immediate profit of yarn mills is around 2000, and the actual production loss is also narrowing. If calculated based on the cotton cost a month ago, the loss is only around 900.
(2) Negative Factors
1) From the perspective of global monetary liquidity, the general economic trend is downward. With the expectation of a global economic recession, global cotton consumption will inevitably shrink further.
2) Currently, social inventory remains at its highest level in the same period of history, and the oversupply situation is intensifying. The average finished goods inventory of yarn mills has accumulated to 49 days. How to reduce high inventory of fancy yarn is the core issue.
3) The US boycott of Xinjiang cotton is a long-term suppression for China, and the outflow of export orders will inevitably intensify.
II. US Cotton
(1) Positive Factors
1) The US interest rate hike in July has been implemented, and the short-term negative impact has been exhausted. Recently, the overseas commodity index has rebounded, and US stocks have also shown a low-level rebound. The market's trading logic of recession has temporarily come to a standstill.
2) Most overseas agricultural products are affected by the weather. The drought in Texas is worsening, and the severe drought rate in Texas has risen from 84% to 85%, with weather premiums remaining.
3) The year-end inventory of US cotton for the 2022/23 season was 520,000 tons in July, the historically lowest year-end inventory. The inventory-sales ratio has adjusted to 14.5%, the lowest in twenty years.
(2) Negative Factors
1) The Federal Reserve implemented an interest rate hike in July. CPI is expected to decline in August, but it remains high, and the pace of interest rate hikes may slow down, but the direction remains unchanged.
2) The consumption in Vietnam, Indonesia, and Bangladesh markets is marginally deteriorating, and yarn prices in Pakistan are falling continuously.
3) Funds are taking a wait-and-see attitude towards cotton, and the latest net long ratio of funds remains unchanged month-on-month.
Matters to Note: US weather
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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