The new cotton harvest is coming to an end
The current Xinjiang cotton harvest is coming to an end. The reporter learned that due to the significant increase in production costs, the purchase price of cotton in the new year is relatively high. There have been larger increases in previous years.
According to data from the China Cotton Association, as of November 15, the cotton picking progress in Xinjiang was 94.9%, 3.5 percentage points slower than the same period last year; the delivery progress was 94.0%, 3.1 percentage points slower than the same period last year. percentage points; the machine-picked cotton harvest in Xinjiang has basically ended. The rate of machine-picked cotton in northern Xinjiang is 98.7%, and the rate of machine-picked cotton in southern Xinjiang is 79.1%. Hand-picked cotton is still in progress and is expected to be completed by the end of November.
According to Li Shu’e, a researcher at Huarong Rongda Futures Cotton Research Center, from the seed cotton acquisition platform data query, Xinjiang has recently purchased about 12.8 million tons of seed cotton. If the clothing rate is about 38% According to statistics, Xinjiang’s cotton output is approximately 4.864 million tons. “We are currently at the end of new cotton acquisition. If the total seed cotton in Xinjiang is about 13.5 million tons by the end of November, Xinjiang’s cotton output this year may be more than 5 million tons.”
The cotton output in Xinjiang may be lower than in previous years, but the quality is higher than in previous years
“Due to the impact of some weather disasters during the planting period, the market expects that Xinjiang’s cotton output will be lower than in previous years. Cotton production is lower than last year, and Xinjiang cotton production is currently estimated to be around 5.2 million tons.” Tang Zhen, general manager of the Texas Sales Department of Luzheng Futures, said that judging from the domestic supply and demand situation, relying solely on domestic cotton production will not be able to satisfy the market. If there is demand, it is still necessary to rely on the release of national cotton reserves and cotton imports to meet domestic cotton demand.
Although the market expects that Xinjiang’s cotton output this year may be lower than in previous years, the quality of cotton is higher than in previous years. Li Shu’e said that this year’s cotton quality has been improved from multiple dimensions from planting to cotton picking to final processing. Therefore, the length, strength and horse value of this year’s cotton are all better than last year. However, due to weather factors, some green leaves have not yet fallen off when new cotton is picked, resulting in an increase in impurities. “In addition, the purchase price of seed cotton this year is relatively high, and some cotton farmers have added impurities to the new cotton, causing the new cotton to contain higher impurities this year.”
As the country continues to sell impurities to the market Reserves, the current overall cotton market is in a state of loose supply. According to Li Shue, since July 5, as of November 12, the State Reserve has continued to sell cotton on the market, with a total of 1.2373 million tons put in, and the actual transaction volume was 1.0443 million tons. In the new round of selling cotton, an additional Imported cotton also meets the market demand for high-grade cotton. Overall, the supply side maintains a loose atmosphere.
In terms of the international market, Li Shue said that from the supply side, global cotton will be relatively tight in the new year. This year, India will increase tariffs on imported cotton by 10%, superimposing its CCI Inventories have basically dropped to zero, and very little printed cotton will flow out of the country. There is a certain expectation of a reduction in U.S. cotton production in the new year. During the same period, the textile industry in Southeast Asian countries will resume work, and cotton demand will increase significantly.
“From the demand side, the current U.S. employment data continues to improve. U.S. President Biden has signed the previously passed $1.2 trillion infrastructure bill, which will help the U.S. economy. Rapid recovery will boost demand for textiles and apparel,” Li Shu’e said.
In the view of Wang Haibo, Henan regional director of Melya Futures, the current domestic cotton market should focus on the demand side. If the overseas epidemic situation stabilizes or there is a recovery in consumption, domestic export orders will increase. “Looking at China’s textile exports to the United States, there was a substantial increase in October. However, it should be noted that the export situation to the United States from the fourth quarter of this year to the first half of next year is still not optimistic. On the one hand, the U.S. PPI and CPI are high, and on the other hand, the U.S. PPI and CPI are high. On the one hand, due to the epidemic, the cargo pressure at the port is serious. The channel between transportation and the port is not open, and it may take a long time to solve this problem. If the goods at the port cannot be digested, it will have a negative impact on the subsequent China’s trade with the United States. Export orders will have an impact,” he said.
“From the perspective of downstream demand, through communication with textile companies, we learned that cotton yarn orders are now relatively lower than before September, and shipments are not very good. Data from relevant industry websites show , cotton yarn and gray fabric inventories increased month-on-month from September to October. Textile companies generally reported that sales were not good and the peak season was not prosperous. It is possible that some low-count yarns can achieve a balance between production and sales. The important reason is that the price of raw materials has increased significantly, and downstream people are not willing to accept high prices. Okay.” Tang Zhen said.
Affected by this, the prosperity of the cotton textile industry, which was high in the early stage, has declined. Li Shu’e told reporters that recently more textile companies have slightly lowered their quotations, and the focus of cotton yarn transactions is slowly shifting downwards. As of October, the Purchasing Managers Index (PMI) of China’s cotton textile industry was 36.06%, down 5.16 percentage points from the previous month, indicating that the market sentiment index continued to decline. The index was still below the 50% boom-bust line, indicating that the market continued to shrink.
Where will cotton prices go?
In fact, since the beginning of this year, the main cotton futures contract 2201 has experienced a sharp rise. Entering September, the market price has risen rapidly. The sharp increase in planting costs this year has made the opening price of seed cotton purchase higher. It was significantly higher than the level of the same period last year. Subsequently, due to the battle for cotton among ginners, cotton prices continued to rise, only one step away from 23,000 yuan/ton.
In this regard, Tang Zhen said that cotton prices will show an upward trend in the second half of this year, on the one hand because of better early consumption, and on the other hand because of…�After the National Day, the cost of purchasing cotton in Xinjiang increased significantly.
“Although cotton futures prices have risen significantly in the early stage, the current market price is still at a discount to the spot price. Based on the current cost price of seed cotton acquisition, it is equivalent to the cost price of lint cotton. , the mainstream price in northern Xinjiang is around 24,500 yuan/ton, and in southern Xinjiang is around 23,500 yuan/ton. In contrast, the main cotton contract 2201 has been upside down.” Wang Haibo said.
Li Shu’e said that this year’s Xinjiang seed cotton purchase has gradually come to an end. Although the seed cotton purchase price has declined in the later period, the high cost in the early stage has caused the lint cost to be inverted with the market this year, to a certain extent. This plays a supporting role in cotton prices. In addition, judging from this year’s new round of stockpiling plans, in addition to real estate cotton and Xinjiang cotton, the cotton stockpiles this time also include imported cotton, and the daily selling volume changes according to changes in market conditions, so in the short term, The upward trend in the market will create a certain amount of pressure. However, judging from the years of cotton sales, in addition to the old cotton in 2013, there is also cotton in 2018. There is not much cotton left in the state reserve stockpile, and it is unlikely that the stock will continue to be sold. In terms of demand, the current downstream market remains weak, with fewer overall orders. Due to the high cost of raw materials in the new year, and as the textile industry in Southeast Asian countries resumes production and resumes work, some orders flow out again, domestic demand will be affected to a certain extent. Overall, cotton prices may remain high and oscillating in the short term.
In Wang Haibo’s view, the country still adopts a policy of ensuring price and stable supply of bulk commodities. “From this policy perspective, if cotton prices rise again in the future, the country may increase its reserve sales and even suppress domestic cotton prices through imports. However, the final cotton price still depends on end consumption, and specific attention needs to be paid to the US pressure on Hong Kong goods During the few months when the pressure on the port is digested, textile orders may decrease, and new orders may not appear until the goods on the port are digested, which is expected to be around the mid-to-late second quarter of next year.”
Tang Zhen believes that cotton futures prices are expected to be mainly range-bound during the year and will move in the direction of futures return. Next year’s cotton market should first look at whether subsequent consumers can accept the current price and whether there are enough orders to be transmitted smoothly. If so, the price will still maintain a good trend, otherwise the possibility of a phased decline cannot be ruled out. </p
