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Many Lido period cotton prices focus Zheng Zheng cotton gains do not change
Since entering October, the cotton market has shown strong momentum, driven by improved economic data and positive news related to cotton production. Over just nine trading days, cotton futures surged by 6.07%, reflecting growing investor confidence. The recent G20 finance ministers' meeting emphasized that major economies will not prematurely withdraw from stimulus measures, which has helped stabilize capital flows and boosted market sentiment. With global economic conditions gradually improving, many major institutions now believe the world economy is in a phase of "slow recovery," providing a solid foundation for a bull market in global cotton.
ICE cotton prices have continued to climb, with the December contract closing at 67.96 cents per pound on October 21 — up 10.06% from the start of October and nearly back to pre-crisis levels. According to the latest CFTC data, as of October 13, both hedging and index fund net long positions increased significantly. Hedging net longs reached 39,828 contracts, while index funds’ long positions climbed to 79,566 contracts. This trend indicates a strong long-term bullish outlook for the U.S. cotton market.
Global and domestic cotton production remains stable, and as the global economy continues to recover, demand for cotton is expected to surpass forecasts, further supporting price growth. Since mid-September, the purchase price of raw cotton has steadily risen, with some regions reaching close to 6.6 yuan per kilogram. The price of processed lint has hit around 14,000 yuan, nearing the level seen during the 2003/04 season.
With order recovery in major textile companies and increased demand for cotton in 2010, the state reserve has limited stocks, and its control capacity is constrained. As a result, I expect cotton prices to remain strong, potentially pushing spot prices back to the highs of 2003/04.
According to the latest data from China’s General Administration of Customs, in September 2009, textile and apparel exports totaled about $16.752 billion, up 6.72% month-on-month but down 6.98% year-on-year. Apparel and accessory exports stood at $11.081 billion, rising 5.20% month-on-month but falling 8.12% year-on-year. From January to September 2009, total textile and garment exports amounted to $121.65 billion, down 11.2% year-on-year. However, textile exports saw a narrowing decline, and the PMI index for the textile industry showed a slight increase, indicating better-than-expected performance.
According to WIND data, the main business income of the textile sector has significantly improved. Except for the apparel manufacturing segment, gross profit margins for textile and chemical fiber industries have risen since the beginning of the year. Overall profitability across various enterprises has increased, and the improvement in downstream manufacturing and rising order volumes are likely to further support cotton prices.
While multiple factors are driving cotton prices higher, bulls have accumulated substantial profits, so short-term corrections in Zhengzhou Cotton may occur. However, given the strong fundamentals, any adjustment is expected to be limited. Therefore, I predict that after a brief pullback, Zhengzhou Cotton futures will continue to rise.