【Wdoodoo Cotton Monthly Report】Zheng Cotton Consolidates, Awaiting New Upward Drivers
March 10, 2026
WDD-Global
1262
Guide
Highlights at a glance
Zhengzhou cotton traded narrowly last week amid mixed signals: CF05 fell to 15,295 yuan/ton amid rising port inventories (up 3.42% MoM to 556,500 tons) and a record domestic-foreign cotton spread. While short-term bearishness stems from ample supply—including bumper Xinjiang harvests (7.386M tons inspected) and surging imports—the USDA forecasts a 3.2% YoY global output decline and tighter stocks, supporting long-term bullishness. Middle East tensions boosted energy/chemical costs, briefly aiding cotton as a substitute, but prolonged conflict risks EU apparel exports. Textile mills show operational resilience, yet end-demand remains sluggish—new orders are small, short-term, and price-sensitive, limiting upside. Key near-term catalysts: Middle East escalation, Xinjiang planting policies, and Golden March demand validation. Price outlook: consolidation between 15,000–15,665 yuan/ton; cautious longs on dips, profit-taking on rallies.
Zhengzhou Cotton moved in a narrow range last week. The CF05 contract closed at 15,295 yuan/ton, down 90 yuan/ton from the previous period. Cotton 3128B closed at 16,400 yuan/ton, down 35 yuan/ton from the previous period. Bullish factors from overseas markets during the holiday were mostly digested, and a large volume of imported cotton arrived at ports earlier. Attention will be paid to whether downstream peak-season demand will materialize.
- Middle East situation spirals out of control, commodity volatility intensifies
2. Supply: bearish in the short term, bullish in the long term
With a large volume of cotton arriving at ports earlier, port inventories rose significantly. As of March 5, imported cotton inventory at major ports stood at 556,500 tons, up 3.42% month-on-month. The Middle East conflict continued this week, with US cotton weekly sales falling and prices retreating. The spot price spread between domestic and foreign cotton (converted at 1%) hit a five-year high, capping the upside of Zhengzhou Cotton.
In the medium and long term, the USDA forecasts global cotton output for the new season to decrease by 3.2% year-on-year and ending stocks to fall by 5.2% year-on-year. Demand has increased notably amid capacity expansion at Xinjiang spinning mills. A definite reduction in Xinjiang cotton planting area is expected in the new season, and positive policies are hard to disprove before the sowing period. Expectations of supply contraction in the new season are expected to underpin cotton prices in the long run.
3. Textile enterprises show resilience, but end-demand recovery is slow
Spinning enterprises have resumed operation after the holiday, with operating rates picking up. Cotton inventories at spinning mills fell month-on-month, while cotton yarn inventories at weaving mills rose and finished goods inventories declined. Funding conditions at yarn enterprises are generally sound, with strong price-supporting willingness. However, the market is dominated by deliveries of earlier orders, with insufficient follow-up of new orders, mostly small and short-term orders, and limited acceptance of high-priced cotton yarn. Profits from grey fabrics remain low, and foreign trade orders for clothing have not recovered significantly, blocking price transmission to the terminal. As the "Golden March and Silver April" peak season deepens, attention will be paid to whether end demand provides effective support.
Overall, port inventories are high and the domestic-foreign cotton spread continues to widen. After short-term speculation on supply-friendly policies, the market is taking a breather and waiting for demand follow-up in the March peak season. In the medium and long term, rigid demand from Xinjiang spinning mills provides support; positive Xinjiang cotton planting policies are hard to disprove before sowing. The USDA report indicates a tight supply-demand balance in the new season, which underpins cotton prices in the long run. Zhengzhou Cotton is expected to consolidate high between 15,000 and 15,665. Long positions may be reduced appropriately on rallies, while a moderately bullish view on dips is preferred in the medium and long term.
Key focuses this week:
1.Sustainability of the Middle East geopolitical conflict;
2. Policies on Xinjiang cotton planting area for the new season;
3. Performance of end demand.
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