According to feedback from cotton yarn trading companies in Guangdong, Fujian, Jiangsu and Zhejiang, etc., since mid-June, the main contract of ICE cotton futures has continued to fall sharply from 126 cents/pound, and funds and bulls have stayed at the 90 cents/pound mark; in addition, Recently, the growth rate of cotton yarn exports from India, Pakistan, Vietnam and other origins has shown stagflation and decline. In the past half month, the US dollar quotations of bonded and cargo cotton yarns have continued to fluctuate and decline, especially the early quotations of Indian C32 and above cotton yarns, which were obviously artificially high. The inversion range of domestic cotton yarn continues to narrow.
Judging from the quotations of several light textile import and export companies and weaving companies, at the end of June, the price of domestic C32S knitting yarn and customs-cleared Vietnamese rapier knitting yarn was about 1,200-1,500 yuan/ton; domestic C32 mid-range yarn and customs-cleared Indian C32 package The inversion range of bleached yarn is about 1,500-2,000 yuan/ton (Indian yarn is large factory and brand yarn), which is nearly 1,000 yuan/ton narrower than that in May/June.
So with the price difference between domestic and foreign cotton yarns shrinking significantly, will there be an opportunity for domestic weaving companies and traders to sign contracts to import foreign yarns? It is understood that at present, some cotton yarn operators in Foshan, Shaoxing and other places have rebounded in inquiries/firm offers for Vietnamese yarn, Indian yarn, and Pakistan yarn with far-month shipping schedules, but there has been no significant increase in volume. Buyers are still cautious, mainly because of consideration Since June 21, the U.S. government has comprehensively upgraded its ban on Xinjiang cotton imports, and the European Union has also followed suit. The U.S. has legislated to prohibit the entry of Xinjiang cotton products. Some export-oriented companies and OEMs have a strong demand for imported cotton yarn. On the one hand, ICE cotton futures are constrained by negative factors such as an 11% year-on-year increase in U.S. cotton planting area in 2022, strong expectations for the Federal Reserve to continue to aggressively raise interest rates in July, and a decline in the overall inflection point of crude oil, natural gas, black series, heavy metals and other futures. The oscillation bottom channel, the short-term 90 cents/pound mark of the main contract may be exceeded; on the other hand, the Federal Reserve’s strategy to combat inflation by continuing to raise interest rates is very clear. It is almost certain to raise interest rates by 75 basis points in July, and the intensity of interest rate hikes in September will be increased. Expectations are also increasing, so the probability of a sharp depreciation of the RMB in the second half of 2022 is higher. In addition, with the full recovery of Indian yarn mill production capacity in the second half of 2022, cotton yarn production has bottomed out, and the sales pressure of yarn mills has increased accordingly, and they may have to resort to price reduction and selling.
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