Cotton Spot Price Increase To Enlarge International Cotton Prices To Maintain Consolidation Pattern

Domestic cotton yarn prices, polyester and short prices continued to rise.

On the one hand, the rise of cotton prices has led to the extrusion of cotton yarn profit margins, and the reduction of fabric orders may restrict cotton production. On the other hand, domestic cotton supply is still in a stage of tension.

In the market, many factors are intertwined. It is expected that domestic cotton prices will continue to fluctuate in a short time.

According to the national cotton market monitoring system, as of July 1, 2016, the new cotton harvest has ended; the seed cotton sale progress is 98.5%, an increase of 0.8 percentage points compared with the same period last year; the processing rate is 99.2%, an increase of 1.6 percentage points compared with that of the previous year; the sales rate of new cotton (98.3% of the sales) increased by 17.6 percentage points compared with that of the previous year, which was 6.9 percentage points higher than that in the normal years of the past four years, of which the sales rate in Xinjiang was 98.8%.

According to the estimated 5 million 216 thousand tons of cotton production in the country (the national cotton market monitoring system forecast in November 2015), as of July 1st, the national total processing of 5 million 76 thousand tons of lint was reduced by 1 million 228 thousand tons compared with the same period last year, a decrease of 2 million 60 thousand tons compared with the normal years in the past four years, of which 3 million 645 thousand tons of lint were processed in Xinjiang, and 5 million 34 thousand tons of cotton lint, a decrease of 174 thousand tons compared with the same period last year, a decrease of 1 million 605 thousand tons compared with the normal years in the past four years, of which Xinjiang sold a 3 million 614 thousand ton of lint cotton.

This week, cotton spot prices and futures price increases were magnified.

In July 1st, the average selling price of the standard grade lint in the mainland was 13201 yuan / ton, up 542 yuan / ton compared with last week, or 4.28%, up 139 yuan / ton compared with last week, or 1.1%; the average price of Xinjiang standard lint sale was 12260 yuan / ton, unchanged from last week, down 774 yuan / ton, or 5.9%.

Zhengzhou cotton futures contract settlement price of 14135 yuan / ton in July, up 830 yuan / ton compared with last week, or 6.24%, up 1540 yuan / ton, or 12.2%.

The national cotton trading market electronic matching pactions in July the average contract price of 14022 yuan / ton, compared with last week rose 977 yuan / ton, or 7.49%, up 1565 yuan / ton, or 12.6%.

This week, domestic cotton yarn prices, polyester and short prices continued to rise.

The cost of spinning enterprises increases with the increase of raw material prices, and the profit space is compressed.

In July 1st, the price of 32 cotton combed yarn was 19880 yuan / ton, up 110 yuan / ton, or 0.56%, compared with last week, and the price of polyester staple fiber was 6670 yuan / ton, up 60 yuan / ton last week, or 0.91%.

This week, the international cotton price maintained a consolidation pattern.

In June 30th, the USDA coverage area showed that in 2016, the US cotton planting area increased by 17% over the same period last year, exceeding the market expectation.

ICE futures dived immediately after the announcement and sped up most of the gains in the previous few days.

In July 1st, New York cotton futures contract settlement price in October was 65.1 cents / pound, up 0.6 cents / pound compared with last week, or 0.93%.

The international cotton index (M), representing the average CIF price on behalf of the imported cotton China, was calculated at 1% tariffs, 12532 yuan per ton of RMB import cost, 16 yuan per ton higher than last week, 0.12%, lower than the domestic market 669 yuan / ton, and the price difference was 526 yuan per ton compared with last week; the import cost of RMB was 14141 yuan per ton compared with last week, up 18 yuan / ton last week, up 0.12%, higher than 940 yuan per ton in the domestic market, and the spread of 940 yuan / ton from last week. The price difference was narrower 524 yuan / tonnes from last week.

Four, analysis and Prospect

Domestic cotton prices will fluctuate significantly.

On the macro side, according to the National Bureau of statistics, the purchasing managers index (PMI) of China's manufacturing industry in June was 50%, a slight decrease of 0.1 percentage points from last month, which is at the critical point.

According to the classification index, production index, new order index and supplier delivery time index are higher than the critical point in the 5 classification indices of manufacturing PMI, and the employee index and raw material inventory index are below the critical point.

Production index was 52.5%, an increase of 0.2 percentage points from last month, which is higher than the critical point, indicating that manufacturing production has maintained steady growth.

The new order index was 50.5%, down 0.2 percentage points from last month, but it remained stable above the critical point for four consecutive months, indicating that the manufacturing market demand continued to expand and the growth rate slowed slightly.

The employment index is 47.9%, down 0.3 percentage points from last month, and is still in the contraction area, indicating that the employment volume of manufacturing enterprises continues to decrease.

Raw material inventory index was 47%, down 0.6 percentage points from last month, below the critical point, indicating that the main raw material inventory of manufacturing industry has declined.

On the basis of fundamentals, on June 27th -7 1, the China cotton reserve management company planned to sell 107 thousand tons of cotton reserves, all of which were made of domestic cotton. The actual turnover was 106 thousand and 990 tons, with a turnover rate of 99.97%, all of which were made of domestic cotton.

As of July 1, 2016, the cumulative output of reserve cotton in 2015/2016 was 1 million 60 thousand and 300 tons, of which 764 thousand and 200 tons were made for domestic cotton and 296 thousand and 100 tons for imported cotton.

At present, the cost of raw materials for spinning enterprises increases with the increase of the auction price of cotton reserves, and the profit space is compressed.

However, in the current market price of 20500-20800 yuan / ton of C32S in the Jiangsu and Zhejiang market, the profit of reserve cotton spinning C32S yarn is still 500-1000 yuan / ton.

At the same time, the price of cotton yarn in India and India increased as the price of cotton increased in China, and the price rose by more than 0.20 cents / pound.

According to feedback from some foreign trade companies, the order of cotton yarn and grey fabric has gone downhill in June. Orders for low count yarn and low count fabric returned from Southeast Asia and other countries have gradually entered the finishing stage, with a strong desire to cut production and stop production.

In terms of technology, Zhengzhou cotton main contract (CF1601) rose sharply last week and its holdings increased. It is expected that there will be significant fluctuations in the near future.

International cotton prices will continue to be consolidated.

On the macro side, an industry report released by the financial data company (Markit) showed that the US Manufacturing Purchasing Managers' index (PMI) in June was 51.3, higher than last month, and the employment sub index was the highest since January.

Markit chief economist Williams commented that PMI data showed continued weakness in the US manufacturing sector, suggesting that the US economy is still not ideal after its performance.

In terms of fundamentals, the US Department of agriculture report shows that on June 17-23, the net volume of US cotton exports was 13 thousand and 300 tons in 2015/16, down 66% from the previous week, which is 50% lower than that of the previous four weeks.

In 2015/16, the installed capacity of upland cotton was 52 thousand and 100 tons, an increase of 39% over the previous week, an increase of 23% over the previous four week average.

This week, the average price of M spot in the seven largest markets in the United States was 67.49 cents / pound, up 0.98 cents / pound from the previous week.

In terms of technology, last week, the main contract of New York Futures (December contract) was oscillating sharply, and there was no directional change.

It is expected that in the short term or by the impact of Zheng cotton futures prices, the fluctuation may increase.