Recently, the situation in Ukraine has escalated and international crude oil prices have been consolidating at high levels. However, this has triggered strong risk aversion in the financial market. The main CF2205 contract of Zheng cotton futures fell below the 21,000 yuan/ton round mark, and the spot price also fell accordingly, resulting in cotton market prices and The inverted cost gap of lint among ginning enterprises has widened, and the mentality of ginning enterprises has been hit. What is the current situation of ginning enterprises? The author conducted a survey on some enterprises.
As we all know, during the launch of new cotton last year, the price of seed cotton rose, which greatly increased the cost of lint cotton processing. The cost of most machine-picked cotton in northern Xinjiang is 23,500-26,000 yuan/ton, and the cost of most machine-picked cotton in southern Xinjiang is 22,500-24,500 yuan/ton. As the cotton market price has not reached the expectations of most ginning companies, Xinjiang’s cotton sales this year have lagged far behind the normal level in previous years. Before the Spring Festival, only about 20% of Xinjiang’s lint sales were completed. Faced with pressures such as loan repayments and workers’ salary payments, some companies had to sell some spot goods in order to withdraw funds. However, in the face of large-scale floating losses, more companies can only continue to “resist hard” and pin their hopes on Gold, three, silver and four are the peak textile seasons.
In the blink of an eye, March has arrived, and the situation of cotton ginning enterprises has not improved, but the dilemma has become more prominent. According to feedback from some ginning companies in Wusu, Korla, Aksu and other places, the prices of lint and cottonseed fell to varying degrees from November to December last year. Not only was lint difficult to sell, but cottonseed was also hit. Prices of lint and cottonseed rebounded in January this year, but companies with lint costs above 23,500 yuan/ton still had no opportunity to ship. Only a small number of companies had low-cost inventory flowing out during this period. After the Spring Festival holiday in February, the demand in the downstream textile market has not improved significantly, and the cotton yarn inventory of some spinning mills has been rising, and the enthusiasm for inquiry and purchase of lint has been greatly reduced. What is even more shocking is that since Zheng cotton reached above 22,000 yuan/ton, it has successively fallen below the important levels of 21,500 yuan/ton and 21,000 yuan/ton, running counter to the expected sales price, and the pressure has increased again.
Due to poor demand from downstream textile companies and the escalation of the situation between Russia and Ukraine, market expectations for the peak season in the Golden Three Seasons have declined. In the situation where cotton is easy to fall but difficult to rise, some ginning companies expect shipment prices to fall accordingly. If there is a periodic rebound in the market outlook, cotton companies may focus on accelerating the pace of “unwinding”.
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