【Wdoodoo Weekly Cotton Report】Zheng cotton remains sideways, awaiting the implementation of new-season planting.

Last week, Zheng cotton continued sideways consolidation. CF05 closed at 15,255 yuan/ton, down 180 yuan/ton week-on-week. Cotton 3128B closed at 16,410 yuan/ton, down 150 yuan/ton from the previous period. The downstream sector provided some support to cotton prices, but there was a lack of bullish catalysts.

01. First Key Juncture in the Middle East Situation

The Middle East is in a state of fighting while negotiating, with the situation evolving toward prolonged confrontation and periodic intensification, which continues to impact crude oil production and transportation in the Persian Gulf. Due to the repricing of war risk insurance and time lags in restoring shipping order, commodity costs are expected to remain elevated for an extended period. However, far-month contracts may price in a recession narrative, requiring vigilance over changes in the term structure.

02. Near-term Supply Loosening; Focus on New-Crop Supply Reduction Expectations

Meanwhile, the USDA report projected U.S. cotton planting area for the new marketing year to rise 3.9% year-on-year to 9.64 million acres, exceeding market expectations and further pressuring the market in the short term. However, Thursday’s U.S. cotton export weekly report showed an increase in sales. The Middle East conflict has driven up agricultural input costs, disrupting planting expenses. Currently, the U.S. and India are in cotton land preparation, while Brazil is in topdressing stage, raising market concerns over potential damage to new-crop output. ICE cotton prices rebounded rapidly supported by bargain hunting.Nevertheless, as the new planting season approaches, China’s target price subsidy policy remains undetermined, fueling expectations of reduced new-crop planting area. Market attention will focus on the actual implementation strength of follow-up policies.

Domestically, with the new planting season approaching, actual Xinjiang cotton planting area and the three-year target price subsidy policy have not yet been finalized. This is key to current long-short game, and market trading remains cautious before policy implementation.

03. Silver April Orders Narrow; Demand Provides Support Rather Than Catalysts

Textile mill operating rates edged down slightly, raw material inventories decreased month-on-month, and yarn inventories of spinning enterprises rose slightly, though total inventories remained low. Finished goods inventories of fabric mills continued to fall month-on-month. Spinners reported decent orders and sales for 40S yarn, while other varieties showed signs of weakening. Demand is expected to weaken marginally in April, reducing mills’ willingness to actively restock. Downstream support for cotton prices persists, but there is a lack of bullish drivers.

Overall ViewDownstream demand is weakening marginally, U.S. cotton planting area increased unexpectedly, and additional sliding-scale tariff quotas have been issued, with loose near-term cotton supply weighing on the market. However, the Middle East conflict has disrupted cotton planting costs and yield expectations. The market is waiting for potential positive catalysts from the release of Xinjiang cotton target price and planting area plans. Zheng cotton is expected to trade with a slightly bullish bias in the range of 15,000–15,800 yuan/ton this week, with opportunities to buy on pullbacks.

Key Focus This Week

        1.Sustainability of geopolitical conflicts in the Middle East;

        2.New-year planting area policy for Xinjiang cotton;

        3.Performance of end-use demand.