The confidence of Chinese cotton enterprises is gradually recovering. The signing of American cotton is expected to increase

According to the statistics of USDA Cotton Export Weekly Report, as of October 17, 2024, the cumulative net export contract of American cotton in 2024/25 was 1.281,500 tons (including Pima cotton), accounting for 51.18% of the total annual cotton export of 2.504 million tons predicted by USDA (the net contract is not the actual export volume, and there is the possibility of cancellation of the contract between buyers and sellers in the later period).



It is worth noting that in the week of October 11-17, China's net signing of 2024/25 US cotton of 0.62 million tons, accounting for 16.2% of the week's US cotton net signing, although there is still a significant gap compared with the top two Vietnam and Pakistan's net signing, but since August 2024, China's single week signing volume has rebounded significantly. The confidence of international cotton traders and trading enterprises has gradually recovered, and the industry's expectations for Chinese buyers to continue to sign American cotton in October 2024 and beyond have risen.



According to the analysis, in mid-October, the main December contract price of ICE cotton futures fell below 73 cents/pound, 72 cents/pound, 71 cents/pound, and the upside down range of cotton prices inside and outside the 1% tariff (or sliding tariff) expanded again, causing Chinese cotton enterprises to buy on a bargain. At the same time, in mid-September, the import quota of 200,000 tons of sliding tariff cotton was successively issued (100% non-state-owned and limited to processing trade imports), and some export-oriented enterprises above the scale successively replenishment.



From the perspective of competitors, in 2023/24, Brazilian cotton has a high value, a decline in spinnability, and the industry is concerned about the delay of cotton shipments caused by congestion in the port of Santos in Brazil, so Chinese cotton-related enterprises have turned to signing US cotton. Australian cotton is affected by rainfall, although the fiber length, horse value, strength and other indicators are acceptable, but the color level has decreased greatly, so some textile enterprises sign high index American cotton instead of Australian cotton.



In addition, since mid-October, with the 2024/25 US cotton harvesting and processing, the lint grade and quality indicators are basically clear (the excellent and good rate of US cotton continues to rise), and Chinese buyers' concerns have subsided.