Price trend

On the first day back to work after the Spring Festival holiday, Zhengzhou cotton futures saw a strong start, with the main contract rising sharply to close at 15,285 RMB/ton, up 3.8% on the day. The strong performance of US cotton prices during the Spring Festival boosted market sentiment, and coupled with the combined positive effects of macroeconomic and industry factors, domestic cotton prices experienced a strong start after the holiday.

I. Macroeconomic Drivers: Marginal Improvement in Tariff Policy Benefits Textile Exports

After the original "reciprocal tariffs" imposed by the United States were ruled invalid, the Trump administration reissued an executive order imposing an additional 10% tariff, which was then raised to 15% on February 22 and officially took effect on February 24. In terms of actual tax burden, the cancellation of the old tariffs and the implementation of the new tariffs resulted in a decrease in the overall level of US tariffs on China, marginally benefiting China's textile and apparel exports and boosting long-term demand expectations for cotton.

II. Fundamental Core: USDA Report Bullish, Global Cotton Supply and Demand Tightening

The USDA 2026 Agricultural Outlook Forum provided clear bullish signals:

Global Production: Projected at 25.26 million tons in 2026/27, down 3.2% year-on-year, with downward revisions for China, Brazil, and the United States;

Global Consumption: Up 1.2% year-on-year, showing a pattern of reduced production and increased demand;

Global ending stocks: decreased by 5.2% year-on-year, widening the supply-demand gap and supporting an upward shift in the central level of cotton prices.

Key Country Data

China: Production 6.97 million tons (-8.6%), consumption 8.56 million tons (+0.8%), ending stocks 7.84 million tons (-1.0%);

USA: Production 2.96 million tons (-2.3%), consumption basically flat, ending stocks 910,000 tons (-4.5%).

The current price difference between domestic and international markets remains an invisible pressure on cotton price increases. Zhengzhou cotton futures have already exceeded the increase in US cotton futures during the holiday, which still puts pressure on the upside potential of Zhengzhou cotton futures. In the future, it should pay close attention to whether there will be sustained order support during the traditional peak season of "Golden March and Silver April". The market is expected to fluctuate with a slightly upward bias in the short term, but volatility will increase after the surge. Focus on tracking the order and construction data for March.

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