According to feedback from cotton traders in Qingdao, Shanghai and other places, the main ICE cotton futures contract has been consolidating at 82-85 cents/pound since the end of May, showing a bottoming trend; and there are rumors in the market that the 700,000-ton cotton import quota will be sliding with quasi-tariffs. It is expected to be issued in June-July. Therefore, some cotton textile enterprises and middlemen are bonded at the port. Inquiries and purchasing enthusiasm for Brazilian cotton/US cotton/Australian cotton for cargoes from June to August have picked up (quotation in US dollars); while the customs clearance basis quote The export of foreign cotton has begun to slow down under the influence of the continued rebound of Zheng cotton contracts, the “countdown” to the issuance of additional tax quotas, and the weakening of expectations for unilateral appreciation of the RMB exchange rate.
From the survey, the import cost of 2020/21 US cotton EMOT 31-3 36/37 G5 sliding quasi-tariff in China’s main port on June 8-9 was about 15,500. -15,700 yuan/ton (net weight settlement, without considering quota costs); the net weight import cost of M 1-1/8 28 G5 Brazilian cotton under the sliding tax is about 15,200-15,400 yuan/ton, and Xinjiang cotton is higher than the same index of US cotton. 700-1000 yuan/ton; while the weight sales quotation of 31-level “double 28” machine-picked cotton in Henan, Jiangsu and other inland warehouses is about 16350-16550 yuan/ton, which is 1000-1200 yuan/ton higher than the US cotton of the same quality and grade , which is 1,200-1,500 yuan/ton higher than Brazilian cotton (under sliding tariffs), so the competitive advantage of imported cotton is more prominent.
A medium-sized cotton merchant in Zhangjiagang said that it is not common for cotton spinning companies to “overdraft” the quasi-tariff quota and lock in cotton resources. On the one hand, whether the quota can be lowered before mid-July There are variables; on the other hand, can the appreciation of the RMB “press the brakes” and fluctuate in both directions? Some institutions and cotton-related companies judge that the pace of RMB appreciation may slow down, but the trend remains unchanged.
An international cotton merchant analyzed that as the epidemic situation in Southeast Asian countries such as India, Pakistan, and Bangladesh reaches an inflection point and the blockade is relaxed in an orderly manner, not only the economy, trade, transportation, exchanges, etc. are gradually Return to normal, and textile and clothing production, port operations, cargo imports and exports, etc. have accelerated their rebound. Shipments of US cotton, Brazilian cotton, etc. to ports such as Mumbai, Klang, Ho Chi Minh, etc. will also bottom out and rebound; and it cannot be ruled out that some traders will export medium and low quality goods. The possibility of cotton being transferred from China’s main ports to Southeast Asian countries; coupled with the imminent release of cotton import quotas with sliding quasi-tax, it is expected that after July, the pressure on foreign cotton inventories in the main port bonded areas is expected to gradually slow down until it disappears, and warehousing, import and export “guaranteed fees” ”, insurance premiums and other expenses will also decline. </p
