market price review
Recently, the focus of domestic cotton spot prices has shifted upward, and the cotton spot price sales basis has remained stable overall. In the past two days, some cotton merchants have successively lowered the cotton spot price basis, and low basis lint has increased. 2021/22 Xinjiang Machinery The majority of the basis difference of 3128/28B/miscellaneous 3.5% is still CF09+600 and above, a small amount is 300-600, Xinjiang warehouse; there are cotton merchants selling 21/22 Xinjiang machine-picked 3129/28B miscellaneous 2.5% sales basis It is CF09+700-750, from Xinjiang internal library. From July 13 to July 27, 2022, a total of 36,000 tons of reserved cotton were traded. On July 27, 2,000 tons of reserved cotton were actually traded, of which 2,000 tons were sold in inland warehouses, with a transaction rate of 33%. The average transaction price was 15,891 yuan/ton, an increase of 19 yuan/ton from the previous day.
The cotton yarn market has improved slightly, but the overall situation is still weak. Due to the rapid decline in cotton prices and the large cost differences among textile companies, the quotations of pure cotton yarn are still very confusing, and the market is relatively confused. The inventory of finished products in yarn mills has climbed to 48.8 days, and the phenomenon of textile companies reducing production and suspending production continues. Prices of some varieties of cotton yarn: JC32S produced in Jiangsu is priced at RMB 25,800/ton upon delivery; OEC10S denim yarn produced in Xinjiang is priced at RMB 16,500/ton upon delivery; C32S high-end yarn produced in Shandong is priced at RMB 25,500/ton upon delivery.
Domestic market
Domestically, affected by unexpected factors such as the new round of epidemic, the real GDP growth in the second quarter was only 0.4% year-on-year. The decline of major economic indicators slowed down in May. The economy stabilized and rebounded in June. The main indicators rebounded quickly and turned from negative to positive. If we want to achieve an economic growth rate of 5.5% for the whole year, the source of growth still needs policy support, and we will continue to pay attention to the economic rebound in the second half of the year.
As of July 27, the volume of Zheng cotton warehouse receipts was 14,270 (614,000 tons), a decrease of 43 (12,044 tons), and the effective forecast volume was 663 (28,000), which remained unchanged from the previous trading day. The total amount of warehouse receipts and effective forecasts A total of 642,000 tons.
From July 18th to July 22nd (last week), the central reserve cotton entered its second week. The actual transaction this week was 11,800 tons, with a transaction rate of 39%. The weekly average transaction price was 15,978 yuan/ton, which was 218 yuan/ton lower than the average weekly price of the previous week (7.13-7.15).
Recently, the fluctuation range of cotton prices has narrowed, and the cotton yarn market has improved. However, the overall transaction is still weak, and the downstream willingness to stock up is not high. The yarn inventory continues to rise, and the enterprise load remains low. Specifically, this week, the cotton yarn inventory of textile enterprises was 48.8 days, the cotton inventory of textile enterprises was 21 days, and the load of pure cotton yarn mills was 44.5%.
international market
According to the Cotton Information Network, according to the latest data from the United States Department of Agriculture, the overall growth progress of cotton plants in the United States is at a moderate to fast level in recent years, and the boll setting rate is at the second highest level in recent years. Affected by factors such as temperature and rain, the growth progress and conditions of cotton plants vary across the main cotton-producing areas. Judging from the weather conditions, as of the week of the 24th, the “stubborn high fever” in the southwestern cotton area has not subsided, and there has been no significant precipitation, and the drought in Texas has significantly worsened; the central and southern cotton areas encountered thunderstorms and gusty winds, and received a small amount of precipitation but did not alleviate the high temperature pressure; the southeast cotton area There was sporadic precipitation in some areas of the cotton region, but overall it was a hot and dry weather pattern.
According to Cotton Information Network, retail sales of clothing and clothing accessories in the United States in June 2022 were US$25.764 billion, a year-on-year decrease of 0.25% and a month-on-month decrease of 0.39%. The total retail sales of clothing and clothing accessories from January to June 2022 was US$154.594 billion, a year-on-year increase of 10.66%. In June 2022, India’s exports of cotton yarn, fabrics, manufactured goods and handloom products and carpets were US$962 million, a year-on-year decrease of 19.49%. However, due to the increase in raw material prices and the increase in product unit prices, clothing exports have increased significantly.
On July 27, the price difference between the CCI index and the FCIndex RMB index was -3180 yuan/ton, and the price difference fell by 585 yuan/ton from the previous trading day; the ZCE2209-ICE2212 contract price difference was 770 yuan/ton, and the price difference fell by 670 yuan from the previous trading day. /Ton.
On July 22, the domestic cotton spot price index CCI3128 reported 15,807 yuan/ton; FCIndexM reported 111.93 cents/pound, discounted to 18,542 yuan/ton under 1% tariff, and 18,666 yuan/ton under 78% discounted quasi-tax. The price difference between the spot price index and the foreign cotton price under the sliding tax is -2859 yuan/ton, which was -904 yuan/ton on July 15. Compared with the price under 1% tariff, the price difference is -2735 yuan/ton. The difference between the spot price index and the sliding tax rate has expanded. On July 22, the main contract 2209 closed at 15,195 yuan/ton,�FCIndexM (sliding tax) price difference is -3471 yuan/ton, which was -3347 yuan/ton on July 15. Its price difference with FCIndexM under 1% tariff is -3347 yuan/ton. The price difference between Zheng cotton and the sliding tax has widened.
Summarize
On the whole, last week’s cotton was oversold. Previously, the market did have favorable factors such as weather premium in production areas and textile company inventories at historical lows. However, they were buried by panic. After the sharp drop in prices in the previous cycle, The bearish sentiment has been clearly released. Last week, President Xi came to Xinjiang to inspect cotton fields. His emphasis on Xinjiang’s cotton industry has increased the market’s positive expectations for future policies. In addition, last weekend, the news that rural commercial banks in some areas extended their stay for cotton processing enterprises spread in the market. In addition to the good news Under the influence of the epidemic, panic sentiment has been restored, and the market has also turned its focus to subsequent policy changes.
In last week’s weekly report, it was mentioned that “under the influence of the news and expectations of favorable policies, the willingness of textile companies to stock up may increase, which will play a certain supporting role in cotton prices.” This week, the author learned from downstream companies that textile companies are likely to increase their willingness to stock up. Enterprises’ willingness to purchase cotton raw materials has increased compared with before, but due to the scarcity of new orders, the purchase volume has not yet increased. In the context of stabilizing cotton prices, the purchasing volume of textile enterprises may further increase, which will also play a certain supporting role in cotton prices. Cotton prices may fluctuate in the short to medium term.
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