The Situation Of Global Cotton Production And Demand Has Not Changed Significantly. The Increase Of Tariffs In The United States Has Brought About Market Uncertainties

The tariff increase policy of the United States has increased the cost of American imports. Federal Reserve officials are worried that the tariff increase policy will lead to long-term inflation in the United States.

The "Federal Reserve Watch" tool in Chicago shows that the probability of keeping interest rates unchanged at the Federal Reserve's interest rate meeting in March is 83.5%.

There will be no major change in global cotton production and demand in 2024/25. The forecast data of the International Cotton Advisory Committee (ICAC) in February has not been greatly adjusted. The global cotton output in 2024/25 will reach 25.55 million tons, an increase of 0.8% month on month and 5.9% year on year; The consumption was 25.42 million tons, unchanged month on month, up 1.8% year on year.

The seeding progress in Brazil has been accelerated recently. According to the data of Brazil National Commodity Supply Company, as of February 2, the seeding progress of cotton in Brazil in 2024/25 was 56.1%, 9.8 percentage points higher than a week ago, and 32.6 percentage points lower than the same period last year.

This week, the National Cotton Federation of the United States will release the intended cotton planting area of the United States in 2025, which needs close attention.

With the implementation of the US tariff increase policy, the domestic cotton price may maintain consolidation. According to the survey, after the Spring Festival, the textile market resumed production in succession. The new orders of Henan and Hebei textile enterprises after the Spring Festival were limited as a whole, mainly focusing on production and shipping orders before the year. The sales price of cotton yarn has not been adjusted temporarily, and raw material procurement has not yet been carried out.

As the current market is still full of festive atmosphere, it is expected that textile enterprises will not fully resume production until after the Lantern Festival.

After the United States imposed an additional 10% tariff, textile enterprises exporting to the United States said that under the current tariff range, orders in the United States market could be maintained, but profit margins were damaged. In the long run, the US tariff policy on China has further squeezed the domestic textile and clothing export market and China's cotton consumption.

In the short term, the US tariff policy is basically consistent with the market expectation, and its negative impact has been digested by the market in advance to a certain extent, and the domestic cotton price remains consolidated. With the implementation of the high-profile tariff policy, the market focus will shift to the later consumption situation.