Tongzhou Cotton Market Brief, Week 3 of November 2022
I. Zhengmian (China's cotton futures contract)
(I) Positive Factors
1) Currently, cotton is undervalued, and its decline in the early stage was deeper than other commodities. The overall decline of the broader market was 1% recently, but cotton rose by 1% in a week, showing its strength and making it a favorable asset for allocation.
2) The total amount of cotton shipped out of Xinjiang this year far exceeds previous years, indicating strong actual transportation capacity. Even with extremely low raw material inventories, mainland yarn factories still have strong buying orders.
3) By the 21st, all warehouse receipts for the 21/22 cotton season must be cancelled. Currently, there are only 217 warehouse receipts for the 22/23 season, posing a potential risk of a short squeeze.
(II) Negative Factors
1) Shijiazhuang was the first city to relax its pandemic control measures; however, the actual situation was not good, with residents showing more fear than before. The improvement in the economy and demand resulting from the relaxation of pandemic control has been proven false in the short term. This weekend, Beijing, Shijiazhuang, and other places have again strengthened pandemic control and nucleic acid testing, marking a temporary end to the positive impact of the relaxed pandemic policies.
2) In October, the year-on-year growth rate of textile and garment exports was -13.5%, the lowest in nearly ten years. With the continued implementation of the Xinjiang ban and the entry of Europe and the US into the end-of-inventory cycle, exports will continue to decline.
3) The operating conditions of domestic downstream industries continue to deteriorate. Due to a lack of orders and the impact of the pandemic, all links have entered a phase of reducing operating rates and destocking.
II. US Cotton
(I) Positive Factors
1) From the perspective of agricultural product price ratios, the price ratio of cotton to soybeans and cotton to corn are both at historically low levels. On the one hand, cotton has fallen more sharply than other agricultural products; on the other hand, the current agricultural product price ratios are not conducive to cotton planting next year.
2) There is still demand in the US market. Total contracts signed are the fastest in nearly five years, and US cotton demand has not shown a significant turning point.
3) December is approaching the first notice day, but there are still 12,000 contracts that have not been priced, creating a driving force for market buying to cover short positions.
(II) Negative Factors
1) To date, the volume of cotton listed in India has steadily increased, with no news of reduced production. As India's cotton listing progresses, the supply pressure on US cotton increases.
2) Exports in Southeast Asian markets continue to weaken. Pakistan's textile and garment exports in October decreased by 10% month-on-month, and Vietnam's decreased by 0.8% month-on-month.
3) Last week, Federal Reserve officials made a series of statements, showing a more hawkish stance on inflation control than the market previously expected, bringing a temporary end to the positive market speculation on a slowdown in interest rate hikes.
Matters to Watch: China's COVID-19 policies
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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