Last week (March 7-11), as the Russia-Ukraine war continued and mutual sanctions between the United States, Europe and Russia further escalated, the crude oil market fluctuated sharply. After hitting new highs, the main crude oil futures contract continued to fall sharply and adjusted, while cotton The trend is relatively stable, maintaining small fluctuations in the range.
Last week, the center of gravity of Zheng cotton increased slightly. When the main contract reached a high of 21,665 yuan/ton, the price continued to rise and showed a clear decline, indicating that under the current market fundamentals, the bulls had some scruples in attacking, and there was still a large amount of new cotton. There are no registered warehouse receipts for spot goods. Once the price approaches the cost of new cotton, a large number of hedging orders will appear in the market. In the short to medium term, the upward resistance to cotton prices is significantly greater than the downward resistance. In addition, March is the window period for the Federal Reserve to raise interest rates for the first time. In addition, the situation between Russia and Ukraine has aggravated commodity inflation, and commodities are facing downward pressure. If the interest rate hike is higher than market expectations, cotton price adjustments will intensify.
Last week, the overall sales situation of Xinjiang lint cotton was not ideal, but ginning companies and cotton traders insisted on selling at high prices, and spot quotations remained stable. The sales quotation of standard grade lint cotton in Xinjiang warehouses remained at 22,600-22,800 yuan/ton. It is understood that for some cotton companies with higher costs, it is currently difficult to buy and sell cotton. Textile companies mostly purchase raw materials to replenish their stocks for immediate needs, and they also maintain a relatively cautious attitude towards the market outlook. At present, cotton’s rise is not driven by consumer-side benefits, and its decline is also supported by high costs, and it still maintains range fluctuations. In addition, the price of Zheng cotton is now at a discount to the spot price and does not have the conditions for a significant downward adjustment. If the market makes such an adjustment, downstream textile companies can actively purchase and replenish their stocks.
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