Tongzhou Cotton Market Brief, Week 4, October 2022
I. Zhengmian (China Cotton Market)
(1) Positive Factors
1) Currently, the domestic valuation is relatively low, and the downside space for cotton prices is limited. From a long-term investment perspective, continuing to short is not suitable in terms of risk-reward ratio. At this low valuation, funds will consider cotton as an over-allocated commodity within agricultural products.
2) Recently, imports of domestic and foreign cotton remain unprofitable, and the amount of imported cotton and cotton yarn continues to decrease, which is conducive to digesting domestic Xinjiang cotton.
3) The Xinjiang epidemic has not yet been relaxed. The inspection volume is only 90,000 tons, and there is still no sign of a large supply of new cotton. The contradiction of short-term supply tension still exists.
(2) Negative Factors
1) Recently, with the decline in the market, the difference between the acquisition cost and the market price is continuously narrowing. Under this circumstance, cotton gins are unwilling to purchase seed cotton at a price exceeding 6 yuan, and it is difficult for the price of seed cotton to continue to rise in the future.
2) The processing volume increased last Sunday, proving that the processing progress is gradually accelerating. If a large amount of new cotton is supplied by the end of October, the market will face enormous hedging pressure.
3) Epidemics have broken out in multiple places, residents' consumer confidence is insufficient, and the marginal decline in consumer willingness is severe. The future consumption is not optimistic.
II. US Cotton
(1) Positive Factors
1) In the latest week, the basis of imported cotton from Brazil, the US, and India remains relatively high, all above 19, and spot prices strongly support cotton futures prices.
2) Currently, US cotton has the deepest decline in the foreign agricultural products sector. From the perspective of sector rotation, the subsequent decline of US cotton is limited.
3) If US cotton stabilizes near 75 cents, spot production in Southeast Asian spinning mills will be favorable, which will stimulate the demand for US cotton in the Southeast Asian market.
(2) Negative Factors
1) With a 75-basis-point interest rate hike expected in early November, the market is widely concerned that European and American countries and emerging economies will fall into financial and debt crises. Economic recession has become a market consensus. If Europe and America really fall into crisis, cotton prices still have room to fall.
2) The listing volume of Indian cotton has begun to increase since October 20, and the supply pressure has begun to emerge, putting pressure on American cotton.
3) The Southeast Asian market continued to weaken this week, with yarn prices falling in India and Vietnam. The operating rate of the Vietnamese market was reduced by another 2 percentage points on the basis of the historical lowest level, and the decline in terminal consumption is still on the way, and cotton prices have not fully reflected the decline in consumption.
Points to Note: Opening price, Xinjiang epidemic
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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