Beginning in May, Zheng cotton futures began a volatile downward path, with the main CF2209 contract falling from 22,000 yuan/ton to around 20,000 yuan/ton. The fall in the price of Zheng cotton futures has led to an increasing number of low-price “dumping goods” in the spot market. In particular, some cotton ginning companies’ expectations for hedging on high rallies have been shattered, and the pace of profit destocking has accelerated. As of June 14, the price of cotton picked by warehouse machines in Xinjiang is basically 20,800-21,000 yuan/ton. Cotton-related trading companies are even offering packages to leave the warehouse, picking batches at will, and paying part of the freight in advance to increase shipment opportunities. Cotton is the most expensive raw material in the production of downstream cotton textile enterprises, and its price changes are bound to affect production and sales profits at all times. Does the recent decline in cotton prices mean that spinning profits have improved?
It is understood that cotton prices have fluctuated frequently in recent years, making it more difficult for downstream textile companies to control costs. In addition, the development of basis trading has led more and more textile companies to choose to purchase raw materials at the lowest possible cost through point pricing. Therefore, currently, except for some large-scale spinning companies with abundant orders, raw cotton stocks are relatively high. Generally, spinning companies do not have much raw materials in stock, and they basically focus on purchasing as they are used. Some textile companies in Jiangsu and Shandong have reported that since the fluctuation of gauze prices in the cotton textile market generally follows the adjustment of cotton raw materials, especially when the cotton price fluctuates more than 500 yuan/ton, most companies will make product price changes based on their own conditions. Adjustment. At the end of May, when Zheng cotton fell below 21,000 yuan/ton for the first time, there was a large basis difference or transactions on the market. Then Zheng Cotton broke through 20500, 20300, and 20100 again, which hurt the companies that purchased raw cotton in the early stage. At first, spinning profits did improve, but as the downward pressure on raw material prices increased, yarn prices continued to fall. In addition, the hot summer season is about to enter. In order to avoid peak power consumption and avoid the impact of the off-season, spinning enterprises can only continue to lower prices in the near future to attract business flow.
In addition, the impact of the U.S. boycott of Xinjiang cotton product exports is also expanding. In order to avoid being “caught as typical examples”, some export companies are forced to purchase high-cost imported cotton for production. Therefore, this round of decline in raw material cotton prices is being transmitted to the downstream market, but if terminal orders are not followed up enough, the improvement in short-term profits may be short-lived.
</p
