Market Observation: The Continuous Fermentation Of US Tariff Parity Caused The Synchronous Decline Of Cotton Both Inside And Outside The Market

Trump announced that the United States will set a 10% "minimum benchmark tariff" for all trading partners and impose higher tariffs on multiple trading partners. Among them, China, the European Union and Japan are subject to additional tariffs of 34%, 20% and 24% respectively; Indonesia, Thailand, Vietnam, and Cambodia are subject to additional tariffs of 32%, 36%, 46%, and 49% respectively. Previously, several trading partners had indicated that they would take countermeasures to respond.

Equal tariff sentiment ferments, and the internal and external markets fall synchronously. In terms of spot goods, the latest cotton price index at 328 level was 14902 yuan/ton, 28 yuan/ton higher than the previous trading day. In terms of spot goods, on April 25, 2024, most of the sales basis of Northern Xinjiang Machinery Mining 4129/29B/Miscellaneous 3.5 was CF05+900 or above, and a few of the low basis was in the range of 800~900, which was self raised in Xinjiang. Most of the 31 level double 29 basis differences of mechanical mining in southern Xinjiang are 800 or above, and some of the mainstream low basis differences are CF05+700~800, all of which are self raised in Xinjiang

The overall change of the pure cotton yarn market is not significant. Textile enterprises sell goods at favorable prices. Downstream orders can be continued in the short term. Local textile enterprises in the mainland plan to have a Tomb Sweeping Day holiday, and most of them maintain production. The cotton grey cloth market just needs to be shipped in the near future, and most textile mills are mainly engaged in production orders. The overall production and marketing are difficult to maintain balance, mainly because downstream demand is difficult to boost, and the loom operating rate of textile mills is temporarily stable.

Trump declared a state of emergency, and set a 10% "minimum benchmark tariff" for all countries, which came into effect on April 5. The higher equivalent tariff levied on major countries with trade deficits with the United States came into effect on April 9. In 2025, the tariff imposed on China has reached 54%, and the effective date has not yet arrived. The US government's policy of temporary change is highly uncertain, which is more targeted to China, At the same time, higher tariffs have also been imposed on other major textile and clothing manufacturing countries.

In the most extreme case, the United States and the world are decoupled. At present, there are still 1 million tons of American cotton that have not been shipped in 2024/25. If the final inventory of American cotton accumulates to the level of 2 million tons, the corresponding external price will drop to 50 cents/pound. Pay attention to the progress of American cotton shipment, the implementation of tariff policies and the performance of inflation pressure in the later period.

In the domestic market, the fundamentals have not changed much. The inventory of downstream finished products is not high and the startup is stable. The demand performance is generally weak in market confidence. Zheng Mian lacks a strong driving range for shock operation. Today, due to the impact of tariff news, the opening price fell sharply. According to the proportion of global cotton textile and clothing consumption, the decoupling of the United States affects about 15% of global cotton consumption (3-4 million tons), while the average output of American cotton in recent years is 3 million tons, and the difference is not large after the allocation of major cotton producing countries. At present, Zheng Mian's price has been in the price range where supply exceeds demand. In the short term, the focus of trading may move downward due to emotional influence. From the perspective of fundamentals, the integer threshold support is strong. Under the bottom line thinking, you can buy dummy put options to avoid macro uncertainty risk.