According to feedback from cotton trading companies in Zhangjiagang, Qingdao and other places, due to the upward breakthrough of the main ICE cotton futures contract since June 8 and the impact of the Federal Reserve’s 75 basis point interest rate hike in June, which will trigger a sharp depreciation of the RMB, in the past week or so, Chinese cotton has Textile companies and traders are generally not very enthusiastic about taking the initiative to clear port bonded cotton, but bonded cotton quotation resources in RMB have increased (purchasers are required to bring their own import quotas and clear customs by themselves, and there are a small number of transactions). At present, non-bonded cotton resources in China’s main ports are becoming less and less and becoming more and more tense. Traders have adopted the operation of increasing the basis (quoted CF2209 + basis).
A cotton company in Huangdao believes that the reason for the short-term scarcity of RMB resources at ports is that the main oscillation range of ICE has moved up to the 140-145 cents/pound range, resulting in US cotton/Brazilian cotton/Australian cotton/Indian cotton under the 1% tariff. The inversion between the direct import cost and the quotation of Xinjiang cotton in mainland banks in 2021/22 has once again widened, and both buyers and sellers are unwilling to clear customs for foreign cotton; on the other hand, Europe and the United States have intensified restrictions on Xinjiang cotton, and some export-oriented textile and clothing companies, OEMs have to rigidly purchase non-bonded cotton from ports. “Less imports and more exports” has caused the supply and demand of non-bonded cotton resources to tighten.
Judging from the quotations, from June 15th to 16th, the basis quotations of Brazilian cotton M 1-5/32 (strong 28GPT) that have been cleared by major domestic ports are concentrated at 22,500-22,800 yuan/ton; while the fixed price is as high as 23,000-23,300 Yuan/ton, due to different specific quality indicators, different warehouses, and large differences in procurement costs among traders, the quotation gap of Brazilian customs clearance cotton at the port even reaches more than 500 yuan/ton; and the current US dollar price of bonded Brazilian cotton is about 148-150 cents. / pound, the direct import cost under 1% tariff is about 24,000-24,400 yuan/ton, and the inverse range with customs-cleared cotton is still generally 800-1,200 yuan/ton.
</p
