Cotton In Reserve: Domestic Cotton Prices Tend To Be Stable, And International Spot Prices Are Strong.

Recently, the domestic cotton market has stabilized. The state attaches great importance to price issues, increases the intensity of policy regulation and studies, emphasizes market stability, and says it will crack down on the speculation of idle capital and drive up prices of agricultural products. Since May, cotton import quotas have been issued one after another. Relevant departments have indicated that, according to market changes and textile demand, we may not rule out the possibility of further issuance of import quotas or other regulatory measures. A few days ago, Xinjiang cotton was kept at about 300 daily average. Many textile enterprises have increased stock of raw materials, and procurement has tended to be cautious, and spot trading has declined. Some cotton enterprises have eased their selling mentality, and enterprises with larger cotton reserves have gradually increased their sales efforts. Cotton prices in some areas have stopped rising or even dropped slightly. In May 28th, the average price of the standard grade cotton in the mainland was 17298 yuan / ton, up 1.3% yuan from last week, or 1.3% percentage points, 1.2 percentage points lower than that of last week. The Zhengzhou cotton futures contract settlement price in July was 17855 yuan / ton, down 285 yuan / ton last week, or 1.6%; Beijing's national cotton trading market electronic matching spanaction July average contract price 17990 yuan / ton, compared with last week, it dropped by 657 yuan / ton, or 3.5% percent; the Hefei national cotton trading center electronic matching spanaction July July contract settlement price 17570 yuan / ton, compared with last week increased by 3.5% yuan / ton, or increased.

On the one hand, there are many unfavorable factors in recent years, and the operation of cotton market is facing some pressure. On the other hand, lint resources are decreasing, cotton yarn prices continue to rise, and market supply is still tight. To sum up, the domestic cotton market is expected to run smoothly in the late stage, mainly based on the early price surge.

Last week, due to massive profit taking in the commodity market, ICE cotton prices fell. In May 28th, the ICE cotton futures contract settlement price in July was 80.05 cents / pound, down 2.92 cents / pound, or 3.5%, compared with last week. The international spot price is still at a high price, and the average port price of the imported cotton China port (M) is 90.73 cents / pound, up 0.01 cents / pound compared with last week. According to the 1% tariff, the import cost of RMB is 16183 yuan / ton (at 6.8279 exchange rate), which is lower than the domestic market price of 1142 yuan / ton, and the spread is 55 yuan / ton compared with last week. According to the sliding tax, the import cost of RMB is 16597 yuan / ton, which is lower than the domestic market 728 yuan / ton, and the spread is 57 yuan / ton compared with last week.

Analysis of the reasons for the high international cotton prices: first, the end of US cotton stocks fell sharply. According to the US Department of agriculture's May production and storage forecast, the US cotton end inventory of 675 thousand tons this year, down 51.1% compared with the same period last year, down 64% from the same period in the past three years, and the stock continued to drop to 653 thousand tons at the end of next year. Second, less than 200 thousand tons of India cotton can be exported this year. The government of India has abolished the ban on cotton exports, and it is difficult to change the pattern of tight supply, which has limited impact on the international market. Moreover, the high price of international cotton yarn and clothing has provided support for cotton prices. In April, the average price of clothing exports in Pakistan increased by 33.4% over the same period last year, a record high.

In the cotton growing area of China, the climate of the Yellow River river basin is suitable and cotton grows well in recent years. The temperature in the Yangtze River Valley is rising and cotton seedlings are growing well. Cotton farmers strengthen field management and prevent pests in time. The northwest inner cotton region has a weak seedling, and Xinjiang, Akesu, Korla, Awati and other counties (cities) suffered severe wind dust and hail weather, and cotton fields were affected to varying degrees. The impact of climate factors on cotton production needs further observation.