Recently, whether at home or abroad, the fundamental impact on the cotton market seems to be somewhat “failed”. Funds come in and out at will along with the macro sentiment, causing cotton prices to fluctuate. This month’s Zheng Cotton 09 contract has fallen nearly 10% from its high point. At 1,000 points, the maximum decline of ICE cotton’s main force reached 11%. With the Standing Committee of the State Council naming commodity prices twice within seven days, how will the cotton price outlook perform?
01 Macroeconomic sentiment suppresses ICE cotton prices
USDA latest report forecast The new US cotton crop output is 3.701 million tons, a significant increase of 520,000 tons year-on-year. The US cotton supply is generally relatively abundant; global ending stocks in 2021/22 have declined, and the total supply is the lowest in the past five years. Although it was the first forecast of cotton data for the new year, the market was not very convinced. ICE cotton rose briefly that day and then quickly fell back, finally closing only slightly higher.
The latest U.S. cotton export sales report shows that in the week ending May 13, U.S. upland cotton export sales increased by 108,000 in net for 2020/2021 bales, an increase of 99% from the previous week, and an increase of 45% from the average of the previous four weeks; U.S. upland cotton export shipments were 345,400 bales, an increase of 25% from the previous week, and a decrease of 2% from the four-week average.
The export data of U.S. cotton in recent weeks has been much weaker than before. U.S. cotton is under pressure. Since there are more than two months left in the year, the impact of export data on prices is also If the price decreases, the market will turn more attention to the contract sales of new US cotton crops.
02 The Ministry of Commerce’s policy helps farmers, Xinjiang’s weather boosts cotton prices
The Ministry of Commerce held a meeting of the Rural Revitalization Leading Group on May 18. The meeting reached the goal of supporting the economic development of poverty-stricken areas, promoting the upward trend of agricultural products and the downward trend of industrial products, exploring rural revitalization assistance paths with business characteristics, consolidating and expanding the results of poverty alleviation and rural revitalization. Cotton, as my country’s second largest crop, promotes agricultural products The upward trend will inevitably bring further development opportunities to cotton-related industries.
Currently, cotton planting in Xinjiang has entered the final stage. However, since mid-April, northern Xinjiang has continued to experience low temperature and frost weather, and southern Xinjiang has also experienced strong winds and dust, and even localized The region is also affected by extreme weather such as hail, and the weather forecast shows that a new round of windy and cooling weather is about to begin. The weather forecast shows that this weather process may last until the night of the 22nd. Since sowing, we have encountered many cooling and windy weather. For cotton, the growth progress may be affected and become slower. A cotton farmer in Shaya County was affected by strong winds. 900 acres of cotton were affected, and the cotton was changed to corn. This is also the impact of recent extreme weather on Xinjiang cotton. At the same time, some growers interviewed expressed less optimism about cotton production this year.
This year’s cotton planting area is 46.6 million acres, a decrease of 2% compared to the previous year. The main reason is that the prices of agricultural inputs and fertilizers, land contract prices, and water fees have all increased this year, which has caused a sharp increase in cotton planting costs and led to a decrease in cotton farmers’ enthusiasm for planting cotton.
The reduction in planting area in the main domestic cotton-producing areas and the impact of bad weather, and the possibility of continued bad weather, make cotton production in the later period relatively less optimistic.
03 Inventory of finished gauze products continues to be low
According to the national cotton Market monitoring system data shows that as of early May, the national cotton industry inventory was approximately 1.004 million tons, an increase of 4.5% month-on-month; yarn inventory was 11.5 days, a month-on-month decrease of 1.8 days, and a year-on-year decrease of 18.5 days; cloth inventory was 37.7 days, a month-on-month increase of 2.1 days , a year-on-year decrease of 11.1 days.
The recent decline in cotton prices has not stimulated the enthusiasm of downstream textile companies to replenish their stocks. Most of them are purchases for urgent needs. The industrial inventory of cotton is the highest in the same period in the past five years. , the market has a strong wait-and-see sentiment. On the contrary, since May, the sales volume and price of cotton yarn and gray fabrics have increased, especially the performance of conventional yarns such as C40S, C32S, and C26S. The operating rate and production and sales rate of cotton spinning enterprises are at a relatively high level, and the inventory of finished products is low. Although it is currently the off-season for apparel production, yarn production and sales have performed well, and inventories have also declined for the third consecutive month, bringing a certain amount of confidence and support to the upstream.
04 Textile enterprises are waiting for the issuance of sliding tax quotas
According to According to customs statistics, my country’s cotton imports in April were 230,000 tons, a decrease of 18% month-on-month and an increase of 92% year-on-year; my country’s cotton yarn imports in April were 230,000 tons, an increase of 10,000 tons or 4.55% from the previous month; an increase of 9% from the same period last year. million tons, an increase of 64.3%.
Affected by the widening price difference between domestic and foreign cotton, the point price transactions of bonded cotton and customs-cleared cotton at ports have increased significantly in the past week, concentrated in Brazilian cotton, US cotton and a small amount of medium and high-quality Indian cotton. Although the National Development and Reform Commission announced the 700,000-ton sliding tax quota at the end of April, it has not yet been distributed to enterprises, making it difficult for many textile enterprises to meet import demand.
05 Macroeconomic policy guidance, the cotton market has entered a wait-and-see stage
4 The Politburo meeting on March 30 pointed out that the current economic recovery is uneven and the foundation is unstable. In terms of monetary policy, the main focus is to be prudent, and “reasonable and sufficient liquidity” is reiterated, compared with the “reasonable and appropriate” policy at last year’s Central Economic Work Conference.Compared with the previous year, the expression was looser; on May 12, the State Council executive meeting proposed, “To deal with the excessive rise in commodity prices and its associated impacts.
Strengthen the coordination of monetary policy and other policies, “Maintaining stable economic operation” once again guided the market to return to rationality; the National Standing Committee held on May 19 also emphasized again that it would strengthen the joint supervision of commodity futures and spot markets, and make arrangements to ensure the supply and stable price of commodities to maintain the stable operation of the economy.
The State Council frequently singles out commodity prices for price increases to cool down imported inflationary pressures. At the same time, it strengthens market supervision, cracks down on malicious speculation, hoarding and other illegal behaviors, and constantly adjusts monetary and other policies. , the short-term cotton market is expected to enter a wait-and-see stage. </p
