After two weeks of rising prices, Zheng Mian ushered in a wave of downward adjustments. The reason for this adjustment was that the Russian-Ukrainian war situation had eased, and the two countries had restarted negotiations. Crude oil prices continued to hit new highs relying on the turmoil in the oil-producing countries. Prices fell sharply, causing other commodities to follow suit lower.
In early March, the People’s Bank of China website released a statistical report on the incremental social financing scale in February 2022. The incremental social financing scale in February 2022 was 1.19 trillion yuan, 531.5 billion yuan less than the same period last year. Among them, RMB loans issued to the real economy increased by 908.4 billion yuan, a decrease of 432.9 billion yuan year-on-year. The growth rate of social financing and credit in February was lower than expected, and the credit recovery trend in January was not continued. This was mainly due to the weakness of credit and weak macro data, which showed that the economic growth momentum was insufficient.
According to the latest data from the National Cotton Market Monitoring System, based on the estimated domestic cotton output of 5.801 million tons (forecast by the National Cotton Market Monitoring System in December 2021), as of March 10, the cumulative sales of lint cotton nationwide were 2.379 million tons, a year-on-year decrease of 2.183 million tons. tons, a decrease of 1.203 million tons compared with the average of the past four years, of which Xinjiang sales were 2.030 million tons, a decrease of 1.975 million tons year-on-year, and a decrease of 901,000 tons compared with the average of the past four years. The sales progress of Xinjiang cotton is only about 35%, which is significantly behind the same period last year. This means that under the influence of high prices, new cotton sales are weak, and downstream companies are mainly replenishing stocks due to rigid needs.
At present, cotton prices are still competing between high costs and low consumption. Once they rise sharply, a large amount of unhedged cotton will flood into the market, forming selling pressure on the market. Market funds will be very careful when intervening. Of course, there is no basis for a sharp decline. Upstream ginning companies and traders still insist on selling at high prices, and the market is supported by spot prices. If the market falls sharply due to bad news, textile companies will actively purchase at price points, and the market will be supported, and the decline will not be too deep. Because the price of new cotton is high, textile companies have very little inventory of raw materials and finished products. When appropriate opportunities arise, companies will restock to meet production needs. Therefore, cotton prices are expected to maintain range fluctuations as a whole.
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