Since April, ICE cotton futures have experienced significant volatility, and the current contract prices are flat or slightly lower than they were a month ago. Affected by China's announcement that cotton was included in the tariff list, ICE futures plunged sharply on April 4, and the next day it quickly recovered and recovered and lost its position. Currently, both the May and July contracts are around 83 cents, and the December contract is around 78 cents. In terms of spot price, the Coulter A index is generally stable, fluctuating between 90-93 cents, China's spot price is slightly weaker, India S-6 is generally stable, export quotation is maintained at around 80 cents, Pakistan spot price from 78 cents rose to 84 cents and then fell back to 77 cents.

Sino-US trade friction has added more uncertainty to the market. On April 3, USA released a tax increase list worth $50 billion, excluding textile and apparel products. On April 4th, China also issued a tax increase list worth 50 billion US dollars including cotton. Currently, the USA is working on a tax increase list with a total value of $100 billion. Whether the future will be implemented is still in an unknown state. Negotiations in the coming months will determine whether or not to actually increase taxes. If implemented, it will have an impact on the trade pattern.

One of the consequences is that imported USA cotton is more expensive than other cotton because of the 25% tariff, so China's imports of US cotton will decline. However, compared with a few years ago, the US cotton imports caused by the increase in tariffs will not fall too much. One reason is that China has significantly reduced cotton imports in recent years. In the past two years, China's US cotton imports ranged from 900,000 bales to 2.3 million bales, far below the long-term historical average of more than 4 million bales. Since the export volume of US cotton to China is already very low, the decline in its export volume will be much lower than a few years ago.

Although US cotton exports to China have declined, exports to other markets will increase, especially in Vietnam and other Southeast Asian countries. Last year, the shipments of USA reached a record high, while exports to China accounted for only US cotton exports. 15% of the volume (far lower than the previous 30-60%), which means that 85% of the US cotton is now exported abroad. Compared with 5-10 years ago, China’s demand for US cotton is in a downturn.

Despite this, the importance of China to US cotton and other varieties of cotton is not underestimated. At present, China's reserve cotton stocks have fallen sharply, and China is approaching a turning point in the sharp import of cotton. The market's expectation that China's imports will return to 10-15 million bales will boost the confidence of cotton exporters.

If the proposed tariff increase is implemented as China's cotton imports increase, it will affect the export of USA cotton to China. However, the export volume of cotton from other producing areas is not comparable to that of US cotton. Therefore, if China imports cotton from other countries, the supply of other exporting countries will be short, and the export volume of US cotton to China will be pushed up.