According to feedback from cotton trading companies in Qingdao, Zhangjiagang, Nantong and other places, the total bonded cotton inventory and the total non-bonded cotton inventory in China’s major ports have been “double-rising” since early July, especially the US cotton inventory in 2021/22. The growth rate was relatively large, and the inventory proportion of U.S. cotton in each main port continued to increase; while the cotton inventory at Indian cotton and Brazilian cotton ports fell slightly, and the inventory proportion declined slightly.
A medium-sized cotton trader in Henan said that there are three main reasons for the recent continued increase in U.S. cotton port inventories:
First, although ICE futures have fallen sharply since mid-June, the front-month contract representing the 2021/22 U.S. cotton has shown strong resilience. Therefore, both the FOB/CNF quotation and the bonded warehouse quotation for U.S. cotton spot prices have been adjusted downwards. The space is significantly lower than that of ICE’s main contract. Under the 1% tariff, the price difference between domestic and foreign cotton has not narrowed but expanded.
Second, ICE’s main contracts have plunged significantly. Some 2021/22 U.S. cotton purchase contracts signed in the first and second quarters of 2022 may be repurchased or canceled by the seller or postponed to 2022/23. U.S. cotton port inventories have been passively rising. Long rise.
Third, affected by the Federal Reserve’s continued aggressive interest rate hikes and the stabilization and rebound of various domestic economic data, the central bank’s monetary policy has shown a steady tightening trend. Credit support for some cotton textile mills and traders has weakened, and the issuance of credit certificates has been extended. .
Several international cotton merchants and import companies have judged that as of mid-July, the total foreign cotton inventory in major domestic ports may have reached about 400,000 tons, mainly American cotton, Brazilian cotton, and Indian cotton. Among them, Jiaozhou Peninsula and The bonded + non-bonded cotton inventory in surrounding ports may be between 260,000 and 280,000 tons; the foreign cotton inventory in Zhangjiagang, Nantong, Nanjing, Jiangyin and other ports totals 52,000-55,000 tons; the total cotton inventory in other main ports is about 70,000-75,000 tons tons (Shanghai, Ningbo, Guangzhou, Tianjin) and other ports.
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