Market Observation: Affected By The International Economic Environment, The Focus Of Domestic Cotton Market Shifts To The New Year

The trend of cotton in April was weak. The fall in cotton prices in April was mainly affected by macro sentiment. Trump's global tariff increase at the beginning of the month made the world's economic expectations somewhat pessimistic. Affected by macro sentiment, cotton prices fell, and the contract fell to near 12490 in September. After that, the United States suspended the plan of levying tariffs on other countries and continued to increase tariffs on China to 245%, This changed the logic of global transactions, and cotton prices began to enter the adjustment stage after the release of early macro emotions. Fundamentally, the supply side continues to maintain a loose situation; With the end of the "Gold, Three Silver and Four Silver", the demand side downstream goods flow, and the order increment is limited, mostly small orders. However, considering the low yarn inventory in the early stage, there is a demand for replenishment in some links, which has a certain support for cotton prices but has relatively limited impact, and cotton enters the range of shock adjustment.

Domestic market: the basic contradiction of cotton in this year is not obvious. With the end of the "Golden Three Silver Four", the focus of the market has shifted to the new year. At present, the temperature in Xinjiang is fair, and the impact on cotton planting is relatively limited.

From the perspective of supply side in 24/25, the commercial inventory in 24/25 was at a high level, of which the commercial inventory in Xinjiang was at a medium high level over the same period of the previous years, and the mainland inventory was at a low level over the same period of the previous years. According to the latest data from China Cotton Information Network, China's cotton commercial inventory in mid April was 4.5152 million tons; The inventory in Xinjiang is 3.2369 million tons; However, the commercial inventory in the mainland is 852300 tons. Although the commercial inventory in the mainland in 24/25 was at a low level over the same period of the previous years, considering that the pure cotton spinning capacity is gradually transferred to Xinjiang, it is estimated that although the inventory in the mainland is low, the possibility of shortage is low.

At present, the sales of new cotton is fairly good, and the sales of cotton have increased month on month, which is currently in the middle of the same period over the years. According to the latest data from China Cotton Network, as of April 17, 4.591 million tons of lint had been sold, an increase over the same period last year, 23600 tons lower than the five-year average. According to the data of the national cotton monitoring system, the national cotton output is expected to be 6.677 million tons, and the sales progress is about 68%.

Imported cotton: according to the latest data released by the customs, the cotton import in March 2025 will be 73700 tons, down 326300 tons year-on-year (400000 tons); From January to March 2025, the cumulative cotton import will be 338700 tons, down 58.7% year on year and 370000 tons year on year (1.05 million tons); From September to February in 2024/25, the cumulative imports will be 730000 tons, down 67% year on year, and 710000 tons year on year (1.73 million tons).

The difference between internal and external prices: The difference between internal and external prices narrowed in April, and the difference between internal and external prices dropped from around 1000 yuan/ton at the beginning of the month to around 100 yuan/ton at present. Due to the tense trade relationship between China and the United States, the market is gradually reducing the import of cotton from the United States. Considering that the output of cotton in Xinjiang has increased significantly this year but the demand performance is average, it is estimated that the cotton supply gap is not large, so the cotton import volume may be low.

Situation on the demand side: With the end of the "three gold and four silver", the market began to enter the off-season consumption gradually. At present, the overall order performance is relatively general, and the order increment is limited. Although the current cotton yarn inventory is relatively low, affected by macro uncertainty, the downstream links are relatively cautious in stocking,

According to the latest data from China Cotton Information Network, the cotton industrial inventory of textile enterprises in the middle of April was 954300 tons, which was at a high level over the same period of the past years; The yarn inventory of textile enterprises is 19.78 days; During the same period, the stock of grey cloth was 29.17 days.

In terms of domestic demand and external demand, the performance of domestic demand in March was fair, while that of external demand was average. In March, the retail sales of clothing, shoes and hats, and knitwear and textiles were 124 billion yuan, up 3.6% year on year, and at the highest level over the same period of the past years. If the country issues relevant policies to stimulate the consumption of clothing, home textiles and other consumer goods, considering that clothing is a seasonal and popular consumer goods, the stimulus effect may be relatively obvious.

In 2025, China's textile and clothing exports will be uncertain. Although the devaluation of the RMB and the good demand of European and American countries are indeed good for exports, Trump will raise tariffs on our goods, which is not conducive to exports. In March, China's textile and clothing exports reached US $23.402 billion, up 12.4% year on year. Among them, textile exports reached US $12.051 billion, up 16.1%; Clothing exports reached US $11.351 billion, up 8.8%. From January to March 2025, China's textile and clothing exports totaled US $66.28 billion, up 1%. Among them, textile exports reached US $33.27 billion, up 4%; Clothing exports reached US $33.01 billion, down 1.9%.

New crop situation: According to the survey results in early April, the data of the intended planting area of cotton in 2025 will remain unchanged. The intended area of cotton nationwide is 44.294 million mu, with a total output of 6.728 million tons. Among them, the intended area of cotton in Xinjiang is 40.48 million mu, slightly more than last year. Considering that the market gradually began to pay attention to the planting of new crops in May, weather factors have a greater impact on cotton. However, the temperature in Xinjiang is moderate at present, and the impact on cotton growth is expected to be relatively limited.

In a word, it is expected that the cotton fundamentals will continue to maintain sufficient supply and general demand in a short time. Although the current cotton yarn inventory is relatively low, the short-term impact of cotton fundamentals on cotton trends is relatively limited. The transaction logic is mainly in the macro Sino US trade policy. At present, macro emotions have been released in the early stage, and short-term shocks are expected to dominate. Considering the recent easing of Trump's speech on China policy, the Chinese side also said that if the United States really wants to solve the problem through dialogue and negotiation, it should stop threatening blackmail and talk with the Chinese side on the basis of equality, respect and mutual benefit. Both sides have shown certain attitudes towards the negotiation. Later, the market will ease the transaction conflict. However, due to the uncertain attitude of the US side. In addition, recently, the Federal Reserve has relaxed its interest rate cut in June, and bulk commodities may be affected by it. However, the macro market uncertainty is high, so it is recommended to wait and see.

On the supply side, according to the latest commercial inventory in mid April, China is at a high level in the same period over the years, and cotton supply is expected to remain loose this year. From the perspective of planting intention in the new year, according to the latest forecast of BCO in April, the estimated planting area in 2025 will be 44.29 million mu, a slight increase compared with the previous year. If the weather does not appear extreme this year, the probability rate of China's cotton production in the new year will remain high or even increase. On the demand side, the overall performance of "gold, three silver and four silver" is average, but the yarn inventory is at a low level at present, and there is a possibility of just needing replenishment later.

In a word, the basic cotton supply is sufficient and the demand is general in a short time. Although the current cotton yarn inventory is relatively low, the basic cotton face has relatively limited influence on the cotton trend in a short time. The transaction logic is mainly in the macro global economy and global trade policies. From a macro perspective, the U.S. economy may face recession in the long term and bring pessimistic expectations to the global economy. It is expected that cotton will still bottom out in the medium and long term, and the medium and long term trend will be weak. However, the recent attitude of China and the United States has eased, and the trend of bulk commodities has rebounded. However, Trump's attitude may fluctuate at any time, and the impact on the market is uncertain.