Since the CF2205 contract price has strongly opened the 22,000 yuan/ton mark after the Spring Festival, not only the cotton spot basis quotation and fixed price have had a good start, but the cotton yarn quotations of textile enterprises have also risen in response, and the pressure since mid-January has gradually been released.
Judging from the survey, mainstream cotton yarn varieties such as C32S and C40S have generally increased prices by 200-1,000 yuan/ton. Some yarn mills have tentatively reported increases before the Spring Festival. The cost pressure on the industrial chain is passed from cotton and cotton yarn to consumer terminals. At present, downstream industries such as spinning, weaving, clothing, and foreign trade companies have not yet started large-scale operations, and the raw material procurement market is still relatively deserted. Therefore, cotton and cotton yarn are still in a state of “price but no market” after the current price rise. Most of the light textile markets and gray fabric traders in Jiangsu, Zhejiang, Guangdong and other places open their business from the eighth to the tenth day of the first lunar month, waiting for consumption support after mid-February.
Cotton spinning companies in Jiangsu, Shandong and other places said that amid the bullish calls from upstream and downstream before the Spring Festival, it was expected that cotton yarn quotations would start to rise after the holiday. Recently, the main contract of ICE cotton futures has retreated from the high of 129.37 cents/pound to 125 cents/pound. Zheng Cotton failed to hold the 22,000 yuan/ton mark. In addition, in the first quarter of 2022, cloth factories and clothing companies have generally received orders. Lower than expected, textile companies are worried that a sharp increase in yarn prices will trigger customer resistance and lead to the loss of orders.
A cotton trader in Jiangsu reported that the transfer of Xinjiang cotton to the mainland in 2021/22 was very slow. As of the end of January 2022, the cumulative shipment volume of Xinjiang cotton this year had dropped by 44% year-on-year, and the decline in railway shipments was particularly prominent. At present, the inventory of bonded + non-bonded Brazilian cotton and US cotton at the port is seriously insufficient (although Indian cotton has a relatively large inventory, it is a weak substitute for high-quality foreign cotton). Therefore, once cotton clothing orders pick up quickly in the second quarter, Enterprises’ concentrated replenishment of stocks may cause cotton futures prices to rise again.
</p
