Nanhua Futures(SH:603093) Nan Hua Qi Huo·2025-09-29 11:20Report Overview - Title: Nanhua Futures' Outlook for Cotton in the Fourth Quarter [1] - Author: Chen Jianing [2] - Investment Advisory License Number: Z0020097 [2] - Investment Advisory Business Qualification: CSRC License [2011] No. 1290 [2] 1. Investment Rating - The report does not provide an industry investment rating. 2. Core Views - In the third quarter, Zhengzhou cotton (Zhengmian) showed a volatile pattern. Domestic cotton consumption was better than expected, with strong domestic demand and "rush - export" orders for external demand. Xinjiang cotton destocking accelerated, supporting cotton prices. However, the expected high - yield of new cotton and poor downstream profits limited price increases. US cotton was in a tug - of - war between slow export sign - ups and a decline in production expectations, with high unpriced contracts, maintaining a narrow - range consolidation. [2] - In the fourth quarter, the listing of new domestic cotton will ease the supply shortage. Ginners may be cautious in purchasing, and the high - yield pattern of Xinjiang cotton will bring significant hedging pressure. Domestic demand may maintain moderate growth, but external sales may not sustain previous strong performance after the "rush - export" orders. Cotton prices lack upward drivers. [2] - The predicted price range for Zhengmian is 13,000 - 14,500 yuan/ton. The recommended strategy is to short on price rebounds and pay attention to the 1 - 5 reverse spread opportunity. [2] 3. Summary by Directory 3.1. Market Review - Zhengzhou Cotton: In the third quarter, Zhengmian fluctuated in the range of 13,500 - 14,400 yuan/ton. After being impacted by tariff policies in the first half of the year, it gradually recovered as tariff policy implementation was postponed. With better - than - expected consumption and reduced imports, Xinjiang cotton destocking accelerated, and inventory was low at the end of the year. However, the expected high - yield of new cotton and poor spinning profits limited price increases. [2] - US Cotton: US cotton fluctuated in the range of 65 - 70 cents/pound. Slow export progress at the beginning of the year was followed by price declines due to tariff policies. After reaching the export sign - up target, prices recovered. High unpriced contracts in the third quarter suppressed prices, and it oscillated narrowly between slow export sign - ups and expected production decline. [7] 3.2. Core Concerns 3.2.1. Import Quotas and Cotton Destocking - From January to August 2025, China's cumulative cotton imports were 590,000 tons, a significant year - on - year decrease of 2.05 million tons, and cumulative棉纱 imports were 910,000 tons, a year - on - year decrease of 610,000 tons. Monthly cotton imports in the third quarter were at a near - decade low. [9] - On August 25, the National Development and Reform Commission issued an additional 200,000 - ton cotton import sliding - duty processing trade quota, which had limited impact on market sentiment. With favorable import profits, cotton imports may slightly increase in the fourth quarter, and the price gap between domestic and foreign cotton may narrow slightly. [9] - Due to reduced imports and increased downstream demand in Xinjiang, domestic cotton destocking accelerated. As of the end of August, China's cotton industrial and commercial inventory was only 2.374 million tons, a year - on - year decrease of 622,000 tons. After the listing of new cotton in the fourth quarter, the inventory shortage can be alleviated, but imports may remain low, and domestic cotton supply and demand may still be tight at the end of the year. [14] 3.2.2. New - Season High - Yield and Hedging Pressure - In the new season, with the support of the cotton target price subsidy policy, farmers' enthusiasm for cotton planting remained high, and the planting area in Xinjiang increased. The expected cotton output in Xinjiang for the 25/26 season is 7.108 million tons, a year - on - year increase of 8.1%. [16] - The concentrated listing of new cotton is postponed to the National Day holiday. Currently, the purchase price of machine - picked seed cotton is stable with a slight decline. Ginners may be cautious in purchasing, and cotton prices may face significant hedging pressure in the fourth quarter. [17] 3.2.3. Domestic and Foreign Sales - Domestic Sales: From January to August 2025, China's retail sales of clothing, footwear, and textiles reached 940.04 billion yuan, a year - on - year increase of 3.91%. Downstream demand is in the peak season, but with expanded spinning capacity, orders decreased, and spinning profits were limited. Domestic textile and apparel sales may maintain moderate growth in the fourth quarter. [19] - Foreign Sales: From January to August 2025, China's total textile and clothing exports were 197.275 billion US dollars, basically the same as the previous year. Cotton product exports showed a "quantity - for - price" trend, and export profits were squeezed under US tariff pressure. Although exports to emerging markets increased, the bright performance of the export market may not be sustainable in the short term without improved US - China tariff policies. [21] 3.2.4. US New - Season Production and Export - In the 25/26 season, due to a low cotton - grain price ratio, US cotton planting area decreased. The USDA expects the new - season planting area to be 56.427 million mu, a year - on - year decrease of 16.9%. Although the weather in cotton - growing areas improved, the expected output is 2.879 million tons, a year - on - year decrease of 259,000 tons. [25] - As of September 11, US cotton export sign - ups were slow. However, tariff negotiation policies may help stabilize US agricultural product exports, and the subsequent adjustment of US foreign tariff policies needs attention. [30] 3.2.5. Global Production and Consumption - According to the USDA's September report, the expected global cotton output in the 25/26 season is 25.622 million tons, a year - on - year decrease of 335,000 tons. China and Brazil are expected to increase production, while the US, Australia, and Turkey will see output declines. [34] - Global cotton consumption is expected to reach 25.872 million tons, a year - on - year decrease of 70,000 tons. China's consumption is expected to decline slightly, and Southeast Asian countries' consumption will be basically the same as the previous year. [35] 3.3. Valuation Feedback and Supply - Demand Outlook - In the fourth quarter, with the listing of new cotton in the Northern Hemisphere, the pressure of high - yield in China will become apparent. Ginners may be cautious in purchasing, and cotton prices may face hedging pressure and have a phased decline. [37] - In the long - term, if China's high - yield situation continues and the US - China situation remains unchanged, the quota for cotton imports may remain low. With the support of Xinjiang's spinning capacity and high operating rates, domestic cotton destocking may be fast, and Zhengmian may rebound after reaching the bottom. [37]