Cotton Market Weekly: Domestic And Foreign Markets May Be "Calm"

The domestic cotton price mainly fluctuates in the short term. The shortage of short-term supply in the domestic market has not been effectively alleviated, and the difference between domestic and foreign cotton prices has been at a high level. It is expected that in the short term, domestic cotton prices will be dominated by fluctuations. International cotton prices may continue to consolidate. This week, the spot price of domestic cotton rose slightly, futures prices fell, and cotton yarn prices continued to rise; International cotton prices fell.

　　 1、 Domestic Cotton price stable

This week, the spot price of domestic cotton rose slightly while the futures price fell slightly. On November 25, the average sales price of standard lint in the mainland was 15850 yuan/ton, up 166 yuan/ton or 1.06% from last week, and 2967 yuan/ton, up 23% year on year. The average contract price of electronic matchmaking transaction in the national cotton trading market in December was 14808 yuan/ton, down 170 yuan/ton or 1.13% from last week, and up 2870 yuan/ton or 24% year on year. The settlement price of Zhengzhou cotton futures CF1701 contract was 15780 yuan/ton, down 165 yuan/ton or 1.03% from last week, up 3580 yuan/ton or 29.3% year on year. The average purchase price of domestic three-level seed cotton was 3.64 yuan/jin (14359 yuan/ton of lint cotton), up 0.01 yuan/jin or 0.28% from last week, 0.88 yuan/jin or 31.88% year on year. The average purchase price of seed cotton in the mainland was 3.7 yuan/jin (14463 yuan/ton of lint), unchanged from last week, up 0.71 yuan/jin year-on-year, or 23.75%; The average purchase price of Xinjiang seed cotton was 3.6 yuan/jin (14313 yuan/ton of lint cotton), unchanged from last week, with a year-on-year increase of 0.94 yuan/jin, or 35.34%.

　　 2、 The price of domestic cotton yarn and polyester staple rose slightly

This week, the price of domestic cotton yarn continued to rise slightly, while the price of polyester staple rose slightly. On November 25, 32 pure cotton combed yarns were quoted at 23175 yuan/ton, up 195 yuan/ton or 0.85% from last week; The quotation of polyester staple fiber was 7325 yuan/ton, up 15 yuan/ton from last week, or 0.21%.

　　 3、 International cotton prices fall

International cotton prices fell this week. On November 25, the settlement price of December contract of New York cotton futures was 72.65 cents/pound, down 0.75 cents/pound or 1.02% from last week. The international cotton index (M), which represents the average landed price of imported cotton in China's main port, is calculated at 1% tariff, and converted into RMB 14230 yuan/ton of import cost, down 127 yuan/ton from last week, or 0.88%, lower than 1620 yuan/ton in the domestic market, and the price difference is down 606 yuan/ton from last week.

　　 4、 Analysis and Prospect

Macroscopically, according to the latest data from the National Bureau of Statistics, from January to October, the total profit of industrial enterprises above designated size nationwide reached 5256.77 billion yuan, up 8.6% year on year, 0.2 percentage points faster than that from January to September. According to the statistics of the General Administration of Customs of China, in October 2016, China imported 41300 tons of cotton, down 1.84% year on year; In October, 140700 tons of cotton yarn were imported, down 19.25% year on year. This week, the People's Bank of China stepped up its investment efforts to achieve a net investment of 40 billion yuan exchange rate Keep innovating low.

In terms of fundamentals, as the picking of new cotton is drawing to a close, the focus of cotton enterprises has shifted from seed cotton acquisition to lint processing, sales and Xinjiang cotton stock transfer. As of November 25, 3.22 million tons of lint had been processed nationwide, a year-on-year decrease of 66000 tons; The cumulative sales of lint were 942000 tons, a year-on-year decrease of 243000 tons. Due to the decline of seed cotton quality in the later stage, lint The cost is still on the high side. The Xinjiang "Double 29" handpicked cotton regulatory warehouse picks 16000 yuan/ton, the cost of transportation to the mainland is 16400-16500 yuan/ton (including 500 yuan/ton transportation subsidies), and the factory price of 3128 grade cotton in the mainland is 15500-15600 yuan/ton. Recently, the outbound transportation capacity of Xinjiang cotton has slowly recovered, and some Xinjiang cotton enterprises have begun to actively move to the mainland. On November 22, the two ministries and commissions issued the announcement on the rotation of national cotton storage, which ensured the supply at the end of the year.

In terms of technology, the main contract of Zheng Mian (CF1705) this week fell after rising on Monday. Recently, attention has been paid to the support of the 20 day moving average, which may fluctuate in the short term.

Macroscopically, the data of the United States continued to perform well this week. The number of Americans applying for unemployment benefits for the first time in the week of November 19 was 251000, an increase of 18000 over the previous week, but still below the 300000 threshold for 90 consecutive weeks; The University of Michigan consumer confidence index in November reached 93.8, the highest since May, better than expected. Most participants in the November FOMC monetary policy meeting of the Federal Reserve said that it may be very appropriate to raise interest rates "relatively quickly", suggesting that the interest rate increase in December is a foregone conclusion. The manufacturing PMI of the euro zone in November was 53.7, up 0.2 points month on month, the highest in 34 months.

Fundamentally, according to the report of the US Department of Agriculture, the net contracted volume of US cotton exports in 2016/17 was 57800 tons from November 11 to 17, an increase of 19% over the previous week and 52% over the average value of the previous four weeks. As of November 15, the processing volume of new cotton in the United States had reached 1.72 million tons, up 32% year on year, higher than 1.709 million tons and 1.298 million tons in 2014/15 and 2013/14, respectively. This week, the average price of M-class spot in the seven major markets in the United States was 74.83 cents/pound, up 0.47 cents/pound from the previous week.

This week, the supply of Indian ginning mills increased, the cotton price began to fall, and the cotton yarn price decreased. On the 25th, the domestic S-6 cotton price in India was 72.92 cents/pound (calculated as 1% tariff, converted into RMB 12645 yuan/ton of import cost), down 2.15 cents/pound, or 2.86%, from last week. The Pakistani government stopped issuing new customs import permits for Indian cotton, and the price of Pakistani domestic cotton fell slightly. On the 24th, the price of Pakistani domestic cotton was 72.04 cents/pound (calculated by 1% tariff, the import cost was 12497 yuan/ton), down 1.02 cents/pound or 1.44% from last week.

On the technical side, the main contract of ICE cotton futures (March contract) fell this week, and we need to pay attention to the support of the 20 day moving average, which may maintain consolidation in the short term.

To sum up, it is expected that the international cotton price will be consolidated in the short term.