Last week (June 27th to July 1st), Zheng cotton temporarily stopped falling and stabilized after continuous sharp declines. The shock range remained at 16,500-18,000 yuan/ton. The market’s short sentiment has been temporarily released, and the weak shock will continue to be maintained in the short term. .
Last week, domestic cotton was growing well, especially in Xinjiang, where the weather was conducive to cotton growth. It has now entered the peak budding and early flowering stages. Cotton farmers are paying close attention to field management to promote budding and flowering. Xinjiang cotton farmers said that this year has been good for cotton, with the number of disaster weather events significantly lower than the same period last year. As long as there are no extreme weather events later, cotton yields are expected to increase. Last year’s cotton sales progressed slowly, and a large amount of resources for sale are still stored in warehouses. New flowers are gradually coming to market. The expected increase in production will definitely increase pressure on the cotton market. In addition, the United States Department of Agriculture released a report on June 30 that the actual cotton sown area in the United States in 2022 will be 12.5 million acres, a year-on-year increase of 11%. With the actual sowing area of US cotton increasing, the ICE cotton market is under pressure and will also put pressure on Zheng cotton.
Last week, downstream consumption was still not ideal, companies were cautious in purchasing, the cotton yarn market was deserted, there were fewer inquiries and shipments, and the accumulation rate of pure cotton yarn and blended yarn continued to rise. It is understood that the number of orders received by printing and dyeing enterprises in Jiangsu Province is relatively low, and the startup rate is generally 60-70%. The orders placed by terminal clothing and fabric customers are still lower than expected. Although the cotton spinning industry is in the off-season, and companies have already been psychologically prepared, the deserted purchase and sales market still exceeds the company’s psychological expectations, and sales difficulties have become a common phenomenon in the industry.
The pressure at the Wanba mark in Zhengmian is obvious. Without the stimulation of good market news, it is difficult for Zhengmian to break through upward. On the contrary, there is insufficient motivation to continue to fall deeply in the short term. At present, the price of Zheng cotton is fluctuating around 17,000 yuan/ton, basically returning to the position before the rise. The market has fully digested various bad news. After the long-short game, the market has regained balance. As for how the market outlook will evolve, downstream consumption is critical. The cotton spinning market is so weak, and insufficient consumption is the main reason.
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