Uncertain Factors Such As Tariffs Led To A Sharp Drop In Cotton Prices

Since April, the cotton price has fallen sharply, which is mainly affected by the macro sentiment. The US tariff news is frequent, the policy is repeated, and the macro pressure is increasing; Fundamentally, the supply side continues to maintain a loose situation, the demand side is weak, and cotton prices fluctuate. According to the commodity market analysis system of the business community, as of April 27, the spot price of 3128B lint was 1461 yuan/ton, down 4.26% from the beginning of the month.

Futures:

In April, the price of Zheng cotton fell sharply, falling below the 12900 mark. As of April 25, the settlement price of the main contract was 13010 yuan/ton, down 4.2% from the beginning of the month; In terms of ICE cotton futures, the market fell first and then rose. As of April 25, the settlement price of the main contract was 68.8 cents/pound, up 0.81% from the beginning of the month.

Macro:

At the beginning of this month, the US "equivalent tariff" was launched, which exceeded the market expectation,. It involves levying an additional 34% on Chinese goods exported to the United States, and ceasing the exemption of tariff on small parcels below $800. Later, the United States postponed the plan of levying tariffs on other countries and again threatened to impose 245% tariffs on China. On the 18th, Trump suddenly changed his tone and said that he was "unwilling to impose tariffs again"... The tariff stick continued to wave, but its impact on the domestic market was weakened, and cotton prices began to enter the adjustment stage after the early release of macro sentiment.

Domestic:

Supply side:

Continue to maintain a loose situation. According to statistics, as of the middle of April, China's cotton commercial inventory was 4.5152 million tons; The inventory in Xinjiang is 3.2369 million tons; The commercial inventory in the mainland is 852300 tons. According to the data from the National Cotton Monitoring System, as of April 24, the national cotton sales rate was 71.3%, 1.6 percentage points higher than the previous year, and 1.1 percentage points lower than the average of the past four years. The cumulative sales of lint was 4.761 million tons, an increase of 646000 tons on a year-on-year basis, 328000 tons more than the average of the past four years.

According to the latest survey on planting intention of the National Cotton Market Monitoring System, in 2025, the intended planting area of cotton in China will be 43.763 million mu, with a year-on-year increase of 1.5%, and the growth rate will be 0.3 percentage points lower than that of the previous period. Among them, the intended planting area of cotton in Xinjiang will be 38.904 million mu, with a year-on-year increase of 2.6%, and the growth rate will be 0.6 percentage points lower than that of the previous period.

The import of cotton decreased significantly year on year. In March 2025, China imported about 70000 tons of cotton, a month on month decrease of about 50000 tons, a year-on-year decrease of about 82.5%. From January to March, China imported about 340000 tons of cotton, down about 67.5% year on year.

Demand side:

Since the middle of April, although most textile enterprises above designated size have maintained a high startup rate, they have entered the off-season due to the sluggish sales of cotton yarn. Textile enterprises are cautious in replenishing their goods and mainly need to purchase just the right ones. The phenomenon of production restriction in downstream weaving mills and garment enterprises is gradually increasing, and some small textile enterprises have begun to take turns off and start off at off peak to reduce the risk of yarn accumulation.

In terms of domestic demand, the retail sales of clothing, shoes and hats, knitwear and textiles in March were 124 billion yuan, up 3.6% year on year, which was at the highest level over the same period of the past years. If the state issues relevant policies to stimulate the consumption of clothing, home textiles and other products, the domestic demand market may be boosted again.

Export:

In March, China's cotton yarn exports reached 31400 tons, up 67.89% month on month and 41.01% year on year. After the year-on-year growth of 46.18% and 12.19% respectively in January and February, China's cotton yarn exports increased significantly again in March. From January to March 2025, China's total cotton yarn export volume was 85300 tons, a year-on-year increase of 35.37% (the total export amount was 333 million dollars, a year-on-year increase of 19.35%).

In March, China's textile and clothing exports grew rapidly year on year, driven by the combined efforts of foreign trade enterprises to avoid higher tariffs, focus on "competing for exports", and low base in the same period last year. In March, the export of textile and clothing was US $23.4 billion, up 12.9% and 80.8% month on month. From January to March, the total export of textile and clothing was US $66.28 billion, up 1%. From the current macro perspective, the uncertainty of China's textile clothing export in 2025 is still large.

International:

The US Department of Agriculture released the April cotton supply and demand report. The US cotton supply and demand balance sheet for 2024/25 this month changed little, only reducing exports by 100000 bales to 10.9 million bales, while the ending inventory increased from 4.9 million bales to 5 million bales. In 2024/25, the global cotton production, consumption and trade volume will decrease, and the ending inventory will increase. The global output decreased by 69000 bags month on month; The global consumption decreased by 520000 packages month on month, and the global ending inventory increased by more than 520000 packages month on month.

April USDA Global Production, Sales and Inventory Forecast Unit: 10000 tons

According to the statistics of USDA Cotton Export Weekly Report, as of April 10, 2025, the cumulative contracted export of American cotton in 2024/25 was 2.527 million tons, exceeding the annual cotton export target of 154000 tons predicted by USDA, and the contracted progress reached 106.5%. By April 10, China had shipped 155000 tons of American cotton in 2024/25, accounting for 92.4% of the total contracted volume. The United States imposed an additional tariff of 145% on imports of Chinese goods, while China imposed an additional tariff of 125% on imports of American cotton goods. As a result, China's direct export of American cotton products to the United States was blocked, while American cotton exports to the Chinese market were simultaneously "frozen".

Future market forecast:

In general, the basic cotton supply is sufficient in a short time, and the demand is general. With the "Golden Three Silver Four" coming to an end, the order increment is limited, mostly small orders. 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. This month's market is mainly affected by the macro level. However, with the release of pessimism and the easing of American attitude, cotton prices may rebound, but the macro level uncertainty also has a greater impact on the market.