Since December, the main contract of ICE cotton futures has rebounded from the low of 102.50 cents/pound in the past month and a half and successfully opened the 105 cents/pound mark. Currently, the long and short sides are in a stalemate around 105-110 cents/pound, and the mood is Restricted by multiple factors such as the USDA monthly report, the COVID-19 epidemic, the Federal Reserve’s interest rate meeting this week, and the trend of the US dollar, the direction is not clear, and it is in a state of “weak upside, but support below.”
According to feedback from some international cotton merchants and import companies, considering that the issuance of 894,000 tons of cotton import quotas within 1% tariff in 2022 has entered the countdown, although Zheng cotton is significantly lower than the comprehensive cost of Xinjiang lint cotton in storage, the domestic cotton futures are still inverted. Nearly 1,000 yuan/ton and the gap between the quotations of US cotton and Brazilian cotton for port customs clearance and the quotations of Xinjiang cotton in inland warehouses is gradually widening. Therefore, some large and medium-sized cotton textile mills have inquired about the US cotton for the January/February/March shipping date of 2021/22. , the enthusiasm for signing contracts continues to pick up.
It is understood that from December 14th to 15th, the basis difference of US cotton EMOT 1-1/8 for the January/March shipping date at various major ports in China was approximately 13-14 cents/pound (ICE2203 + basis difference); while EMOT 31-3 The basis difference of /31-4 36/37 is 16-16.5 cents/pound. The net weight cost of direct import under 1% tariff is 18500-18800 yuan/ton and 19000-19200 yuan/ton respectively; for cotton enterprises It has a certain appeal. According to industry analysis, the factors that have caused the recent increased attention to US cotton cargoes in 2021/22 can be simply summarized as follows:
First, the volatility of ICE futures has narrowed significantly, and the main contract price is at the “watershed” between long and short at 105 cents/pound; second, the weather in the main US cotton-producing areas in November and December is relatively good, and buyers’ lint grade, quality and other indicators Worries about a decline have weakened; third, as the impact of the epidemic in Southeast Asia, Turkey and other countries has weakened significantly, consumption and procurement demand for U.S. cotton have rebounded rapidly, and import pressure on Chinese buyers has increased; fourth, relevant U.S. departments predict that in 2022, Long Beach and Los Angeles will The backlog of cargo at ports will be greatly alleviated, and restrictions on cotton shipments and deliveries will subside; fifthly, compared with competitors such as Brazilian cotton and Australian cotton, the cost-effectiveness of U.S. cotton in 2021/22 is significantly ahead. On December 15, the quotation of Brazilian cotton M 1-1/8 in Qingdao Port was 23,000-23,300 yuan/ton, and the quotation of individual traders reached 23,600-23,800 yuan/ton, while the quotation of US cotton 31-3 36 was 22,800-23,000 yuan/ton. Moreover, the U.S. cotton supply is sufficient in 2021/22, and cotton-using companies have large options.
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