Several cotton textile companies in Jiangsu, Zhejiang, Shandong and other places reported that since late July, the main CF2401 contract of Zheng Cotton has continued to consolidate in the range of 17,000-17,500 yuan/ton, and the trend of “cannot rise, cannot fall” has emerged.
Considering that the central reserve cotton will start auctioning on July 31 and the state will issue an additional 750,000 tons of cotton import quotas with sliding tariffs, the effective supply of domestic cotton will grow strongly in the second half of 2023. Some cotton processing companies and traders in Xinjiang In order to speed up shipments and withdraw funds as soon as possible, Xinjiang cotton spot quotations generally have a correction of 50-100 yuan/ton, hoping to stimulate transactions. From July 30 to 31, the quotation price of “Double 28” (or single 29, main grade 31) machine-picked cotton in Xinjiang’s warehouses is 17,750-17,950 yuan/ton, which is the price difference with the “Double 28” Xinjiang cotton in warehouses in Henan, Shandong and other places. Maintained at 250-350 yuan/ton.
For traders and futures companies to take the initiative to lower spot quotations, cotton-consuming enterprises did not buy it. Except for the urgent need to obtain goods, the market trading was light. Some “Double 29/Double 30” resources were available due to high quotations. A 70,000-spindle spinning company in Xuzhou, Jiangsu said that the central reserve cotton released this time includes high-quality imported cotton and 2019-2020 Xinjiang cotton. The quality indicators and spinnability are relatively good, and can basically replace the imported cotton in 2022/23. / Xinjiang cotton, so the company focuses on the bidding price increase and daily transaction rate of reserve cotton. Several textile companies in Anhui and Jiangsu have judged that with the auction of cotton reserves and the issuance of quotas, the proportion of domestic cotton textile companies using imported cotton will increase significantly. On the one hand, it will help textile and clothing companies receive export traceability orders; on the other hand, It is beneficial to reduce yarn costs and improve product competitiveness.
Overall, although there is a “two-pronged approach” of rolling out cotton reserves and adding additional issuances of sliding quasi-tariff quotas in 2023, there are very few cotton companies/speculators cutting prices, dumping goods, and clearing positions. The spot market has fallen into a stalemate and a state of gaming, and the daily auction of reserved cotton has Quantity, transaction price, transaction rate and the weather in the Xinjiang cotton area in August will become the key factors affecting the current trend of cotton futures. Textile companies call on all bidding companies to bid rationally and reserve cotton in auctions based on their operating conditions and order status.
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