"Equal Tariff" Event Continues To Ferment The Trend Of Cotton Market For Nearly A Week

Last week, the "tariff parity" incident continued to ferment. However, under the multiple pressures of China's tough counterattack and the rise of US debt yield, Trump's rhetoric eased and market sentiment eased. However, the market's fear of economic recession did not disappear, and the downstream market of cotton and textile was full of wait-and-see sentiment.

In the short term, China's cotton processing has basically ended, ushering in the pure consumption season, and the commercial inventory data remains high. However, due to the high cost of some inventories, the low willingness of shippers to sell, the actual circulation inventory is limited, and the number of imported cotton brought by tariffs may further reduce, and the pressure on the short-term supply side will further weaken. Therefore, although the problems on the demand side are obvious, However, in the short term, under the premise of no new emergency risk events, the space below may be small, and the recent spot sales basis has significantly increased.

In addition, if we look further into the future, we can not ignore the expected increase in output combined with the sluggish demand, and the medium and long-term pressure is still coming slowly like a grey rhinoceros. Therefore, with the start of new cotton planting, the impact of the subsequent weather becomes more critical. If the weather in the northern hemisphere is favorable during the cotton growing period, we can not rule out that cotton prices may continue to decline in the future, Cotton prices drive the transfer of new cotton planting to the northern hemisphere.

According to USDA data, as of April 13, the cotton planting rate of 15 major cotton growing states in the United States was 5%; The level of the same period last year was 5%, the same as last year.

According to BCO data, as of April 14, 2025, the overall sowing progress of cotton in Xinjiang is about 62.3%, and the peak of sowing has begun.

Last week, Zheng Mian futures were dominated by shocks, and the main contract CF2509 contract showed a narrow range of shocks. On Friday, the lowest hit 12835 yuan/ton, the highest hit 12915 yuan/ton, and finally closed at 12885 yuan/ton, up 10 yuan from the previous day. The whole week price fluctuation is relatively small, and the power of both sides of the market is balanced, lacking a clear direction.

With the rise of temperature, the progress of spring sowing in Xinjiang's main production areas has accelerated. The market's expectation of cotton supply in the new year is relatively stable. If the planting area remains normal, it may further strengthen the expectation of loose long-term supply.

At present, the spot stock in the market is abundant, but the willingness to purchase in the downstream is low, and the light transaction results in the pressure on the spot price. Traders or ginning plants may face the pressure of inventory digestion, further inhibiting the price rebound space.

Competition differentiation of cotton producing countries:

1. Australian cotton: the demand for low-grade cotton is soaring

Market leading in South Asia: India, Bangladesh and other countries have a strong demand for low-grade Australian cotton (grade 1 and below, 1-3/16 and above in length), and the cotton merchants' quotation basis difference (SI and SLI price difference) is about 350 points, so the transaction is flexible.

Export to China dominated: As of February, Australian cotton had exported 5.12 million bales (about 1.165 million tons), and China was still the largest buyer, accounting for more than 60%.

2. Brazilian cotton: spot sales slow down, and the price difference between new and old cotton increases

The inventory of old cotton has bottomed out: cotton farmers have basically sold out old cotton, and the current price difference between old cotton and new cotton has expanded to 150 points. The price of new cotton in April June packing period is lower than that of Australian cotton, attracting some mills to lock long-term orders.

Strong export momentum: Brazil exported 241000 tons of cotton in March, and the cumulative export volume in 2023/24 reached 2.163 million tons, up 12% year on year.

3. American cotton has a solid position:

Although the tariff risk is suspended, American Cotton is still favored by long-term customers due to its quality and stable supply, and short-term demand has not shrunk significantly.

At present, the global cotton market is still resilient under the shadow of tariffs, and the supply and demand fundamentals and trade flow trend dominate the short-term market.