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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 a strong upward trend driven by improved economic data and positive news surrounding cotton production. Over just nine trading days, cotton futures surged by 6.07%, reflecting growing investor confidence. The recent G20 finance ministers' meeting confirmed that major economies will not immediately withdraw from their stimulus measures, which has helped stabilize capital flows and reduce market volatility. Combined with continued economic recovery in key regions, the market sentiment has turned more optimistic.
Major global institutions now widely agree that the world economy is entering a phase of "slow recovery," providing a solid foundation for a bull market in global cotton. ICE cotton prices have been on a strong climb, with the December contract settling at 67.96 cents per pound on October 21 — a 10.06% increase from the start of October. This brings prices close to pre-crisis levels. According to the latest CFTC data, as of October 13, both hedging and index fund net long positions have risen significantly, with hedging net longs reaching 39,828 contracts and index funds holding 79,566 contracts. This indicates a strong long-term bullish outlook for U.S. cotton.
Global and domestic cotton production remains stable, and with improving global economic conditions, demand for cotton is expected to outperform expectations. Since mid-September, the purchase price of raw cotton has been steadily rising, with some local prices approaching 6.6 yuan per kilogram. The price of processed lint has reached 14,000 yuan per ton, nearing levels seen during the 2003/04 season. With increased orders from major textile firms and rising demand in 2010, the existing stock in the national reserve is limited, and government control capacity is constrained. Therefore, I believe the cotton price will continue to rise, potentially surpassing the high levels of 2003/04.
According to the latest customs data, China’s textile and apparel exports in September 2009 amounted to approximately $16.752 billion, up 6.72% month-over-month but down 6.98% year-over-year. Apparel exports totaled $11.081 billion, an increase of 5.20% month-over-month but a decrease of 8.12%. For January–September 2009, total textile and garment exports reached $121.65 billion, a decline of 11.2%. However, the decline in textile exports has narrowed, and with a slight rise in the textile industry PMI, the overall performance of the sector has exceeded market expectations.
Data from WIND shows that the main business revenue of the textile industry has significantly improved. Apart from the apparel manufacturing sector, gross profit margins for textile and chemical fiber industries have also increased since the beginning of the year. Profitability across different types of enterprises has improved. As downstream manufacturing activity strengthens and order volumes grow, this will further support cotton prices.
Lillian's multi-period analysis highlights key factors driving cotton prices higher. However, bulls have accumulated substantial profits, so short-term corrections in Zhengzhou cotton may occur. Nevertheless, with strong fundamentals supporting the market, any adjustment is likely to be minor. In conclusion, I predict that after a brief pullback, Zhengzhou cotton futures will continue to rise.