Tongzhou Cotton Market Brief, Week 5 of October 2022
I. Zhengzhou Cotton
(I) Positive Factors
1) Due to the impact of the epidemic, the current number of public inspections is slow. The delivery of the 2301 contract must be a new cotton warehouse receipt. According to the current epidemic control status, the 2301 contract faces the risk of no warehouse receipt delivery. 2) Zhengzhou cotton has reached the key level of 12500, and the valuation is too low. Short sellers are unwilling to continue to push down the price. Instead, at this position, more funds and traders are willing to enter the market to go long for long-term investment. 3) The current futures price corresponds to the immediate profit of yarn mills around 1000. If the epidemic is relieved later, yarn mills will have the willingness and motivation to replenish inventory.
2) Zhengzhou cotton has reached the key level of 12500, the valuation is too low, short sellers are unwilling to push down the price, and more funds and traders are willing to enter the market to go long for long-term investment at this point.
3) Currently, the futures price corresponds to a profit of around 1000 for yarn mills. If the epidemic situation improves later, yarn mills will be willing and motivated to replenish inventory.
(II) Negative Factors
1) Under the atmosphere of the overall commodity market downturn, the market is full of short selling sentiment, which is conducive to short sellers.
2) After the end of the "Golden September and Silver October" in China, the textile market has entered a significant off-season, coupled with the outbreak of the epidemic in various places, the terminal demand is sluggish, and the downstream market has no confidence in the future.
3) After entering November, cotton farmers' cotton sales have become passive. The temperature in Xinjiang has decreased, which is unfavorable for cotton farmers to continue to maintain prices. Moreover, as the market price continues to fall, the purchase price of ginning factories will only become lower and lower. Cotton farmers can only benefit from rapid sales.
II. American Cotton
(I) Positive Factors
1) The market has already priced in a 75-basis-point interest rate hike in November. After the November interest rate meeting, the biggest negative factor this year will end, and the market may rebound.
2) India's MSP for this year is calculated to be around 70 US cents, and the external price will be supported around 70.
3) Southeast Asian yarn mills have favorable immediate production. If there is demand later, it will stimulate Southeast Asian markets to purchase American cotton.
(II) Negative Factors
1) The current high interest rates in the United States have a great impact on the real economy. The US manufacturing PMI continues to decline, the economy continues to deteriorate, and the United States is expected to fall into an economic crisis within the next 12 months.
2) The Southeast Asian market continues to weaken, yarn prices in various markets have fallen sharply, especially in Vietnam. The operating rate in the Vietnamese market has fallen sharply by 7 percentage points in the latest week.
3) The US terminal market has entered the active destocking phase, the textile and apparel industry has entered the destocking cycle, and demand continues to fall.
Things to Watch: 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.
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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