Tongzhou Cotton Market Brief, Week 2 of August 2022
I. Zhengzhou Cotton
(1) Positive Factors
1) Currently, the Zhengzhou Cotton Index holds 837,000 contracts, at a historical high. The current price shows intense bullish and bearish struggle. The five-year average for the January contract is 15700. From a pendulum perspective, the future cotton price should return to near the average.
2) The recent performance of overseas markets has been strong, providing support to Zhengzhou cotton.
3) Market rumors suggest that the central bank has approved the extension of cotton loans for 2021 by one year, easing the sales pressure on cotton gins and state-owned enterprises.
(2) Negative Factors
1) Recently, the epidemic broke out in Tibet and Xinjiang. 18 new positive cases were found in Lhasa. The recovery of domestic consumption recently reached its peak and will be affected later.
2) In August, due to the placement of autumn and winter orders, the production and sales ratio of some yarn mills improved, but the overall improvement was not significant. Finished product inventory still cannot be reduced, increasing by 0.4 days month-on-month to 49.6 days.
3) Judging from the growth of Xinjiang's new cotton crop, high temperatures and cotton bollworms have not had much impact. The overall growth of Xinjiang cotton is good, and a bumper harvest in the 22/23 season is unquestionable.
II. US Cotton
(1) Positive Factors
1) In July, the US added 528,000 non-farm jobs, far exceeding market expectations of 250,000. The US economy remains strong. Coupled with the interest rate hike in July, the short-term negative factors have been exhausted, and the market's trading logic of recession has temporarily come to an end.
2) The drought in Texas continues to intensify, and the weather continues to affect US cotton prices. The severe drought rate in Texas has risen from 85% to 88%.
3) Recent continuous rainfall in Pakistan has had some impact on production; the current rainfall in India has not yet caused substantial damage, but if the rainfall continues, it will affect cotton growth.
(2) Negative Factors
1) Global consumption in July was estimated by the USDA at 2609. According to the expectation of global liquidity tightening and economic downturn, global consumption needs to be adjusted downward; at the same time, global cotton production is still expected to increase, and the cotton balance sheet for the 22/23 season is relaxed and adjusted.
2) Bangladesh, where yarn mills performed well in the early stage, has recently seen a 30-40% reduction in orders, weak downstream demand, and yarn mills are starting to lose money.
3) The fund is currently down to 20%, at a low level, and there is no risk of fund squeezing.
Points to Watch: Rainfall in India; Downstream 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.
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
Mobile
CopyRight © 2025 Henan Tongzhou Cotton Industry Co., Ltd.