In late January, the Spring Festival atmosphere became more and more intense. Not only did most cotton processing companies inside and outside Xinjiang suspend production (the daily processing volume of Xinjiang cotton dropped to 6,000-7,000 tons), but cotton companies and traders also significantly reduced their lint quotations, and the number of pending orders and fixed-price resources Also stopped updating.
A ginning factory in Aksu said that only a few traders and futures companies called to inquire about prices this week, and there were very few transactions. Mainland cotton spinning companies basically remained silent, and the phenomenon of “price but no market” in Xinjiang’s regulated Kupi cotton sales was prominent. The company hopes that the main contract of Zheng Cotton CF2205 can effectively break through the 22,000 yuan/ton mark before the Spring Festival, driving up the spot price of cotton after the holiday and accelerating the convergence of futures and current prices.
Judging from the survey, most cotton processing enterprises in Xinjiang are currently under little cash flow pressure and have safely landed before the holiday. On the one hand, since January, financial institutions such as the Agricultural Development Bank of China have taken measures such as adjusting the loan repayment period for loan companies to alleviate the pressure on cotton companies; on the other hand, affected by the continued rise in the price of cotton by-products, the selling price of cotton seeds has recovered significantly, and cotton processing companies have taken advantage of the opportunity. Accelerating the return of funds from cotton seed sales, and selecting opportunities to sell high-quality machine-picked cotton, the capital flow of cotton companies has been effectively supplemented.
In addition, in order to alleviate operating pressure, some cotton companies inside and outside Xinjiang have adopted methods such as pledging warehouse receipts to obtain working capital from large cotton companies and investors. A medium-sized trader in Henan reported that under the premise of a sharp inversion of futures prices and lagging cotton production and sales, it is common for cotton processing companies in Xinjiang to be reluctant to sell.
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