According to feedback from cotton textile mills in Jiangsu, Henan, Xinjiang and other places, as the market price of Zheng cotton CF2109 contract exceeded the 16,500 yuan/ton mark, traders were bidding fiercely and the average transaction price was significantly higher than expected. At present, a large part of cotton spinning mills’ finished product inventories are still at a low level, which provides certain conditions for the stabilization and increase of cotton yarn quotations. Recently, the ex-factory price of cotton yarn and the quotations in the light textile market in coastal areas have shown signs of compensatory increase. The increase range of C32S and C40S yarns is generally 100-300 yuan. /ton, mainly testing the reaction of downstream customers and consumer terminals.
Cotton yarn traders in Jiangsu, Zhejiang, Guangdong and other places said that since June 22, the price of Zheng Cotton CF2109 contract has rebounded from 15,400 yuan/ton to 16,655 yuan/ton (an increase of 8.15% ), since the second quarter, the net profits of cotton spinning mills have been relatively high (profits from spinning 32S yarn are generally 1,500-2,000 yuan/ton), so they have a strong ability to withstand and digest rising cotton prices. However, this round of rise in Zheng cotton has the element of capital speculation. Neither the fundamentals nor the policy support Zheng cotton to continue its sharp rise. It is difficult for the main contract to stabilize at 16,500-17,000 yuan/ton box. Therefore, it is recommended that cotton spinning mills increase prices cautiously to avoid losing customers due to frequent yarn price adjustments.
A medium-sized textile company in Jiangsu judged that the rise in Zheng cotton resonated with the rotation of reserve cotton, causing a large part of unsold Xinjiang cotton to flood into the hedging market. The basis supply of traders and ginners is basically locked by the main contract of Zheng Cotton. There are fewer new cotton resources available for circulation in the spot market in 2020/21. Structural contradictions have emerged, and cotton prices will remain strong. </p
