Reserve Cotton Wheel Out Of The "Bottom"? Domestic Spot Continued To Rise

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According to the statistics of the business agency, as of July 7, the average price of domestic lint spot market was 12098 yuan / ton, which was 182 yuan / ton higher than that on July 1, or 1.52%; it was 2224 yuan / ton, or 15.53%, lower than last year. It is worth noting that when the spot price index of cotton in the domestic market is lower than 11500 yuan / ton, the rotation will be suspended. There is a "bottom line" meaning, cotton prices continue to rise.

As of July 7, the average transaction price of reserve cotton was 11533 yuan / ton, up 394 yuan / ton or 3.54% compared with the beginning of July; the price of 3128b was 12835 yuan / ton, which was 286 yuan / ton or 2.28% higher than that in early July. At present, the rise of domestic reserve prices is similar. From the 100% turnover rate of reserve cotton in the first week, the market enthusiasm is high, and there is a preference for reserve cotton. Even if there is a lot of goods at a high level, the price increases continuously.

Price changes of cotton yarn at home and abroad from June 28 to July 3, 2020

(data source: national cotton market monitoring system, China Cotton network)

According to statistics from the business agency, as of July 7, the average price of 32S ring spinning all cotton yarn for knitting in Shandong was 20500 yuan / ton, down 375 yuan / ton or 1.80% month on month. Last week (6.28-7.3), foreign cotton yarn prices continued to run in a weak position, while internal and external yarn prices continued to run in a weak position. The price difference between yarn and cotton is basically stable, except in Indonesia, where the price of domestic cotton yarn is 160-750 yuan / ton higher than that of foreign yarn. Because the current reserved cotton can meet the production needs of enterprises, the cost can be controlled, and the purchasing enthusiasm of textile enterprises is high. Secondly, a large number of textile enterprises transform into domestic trade, and the market competition is fierce, and the price is suppressed. As a result, the phenomenon of price reduction and sale of cotton yarn in India, Pakistan and Vietnam through customs clearance by traders occurred. The demand side is difficult to change, cotton yarn spot upward resistance is larger.

Business agency analysts believe that the reserve cotton round out seems to be for the spot to make a bottom, the lowest price seems not to fall below 11500 yuan / ton, the market is full of expectations. But in the face of the downturn in the downstream market, or to rationally look at the rise in cotton prices. In January and March, the national development and Reform Commission announced that the target price of cotton in Xinjiang in 2020 would be 18600 yuan / ton, but in fact, the market in the first half of the year could not accept such a price. The spot and futures prices fluctuated between 11000 and 12000 yuan / ton, and there was a gap between reality and ideal. Second, the spot is lower than the reserve cotton, but the first week turnover rate of reserve cotton is 100%, which shows that the reserve cotton has high cost performance and textile enterprises are competing for auction. Third, there are still variables in the downstream demand, and cotton is weak in the current period. At present, the downstream external orders are affected by the overseas epidemic situation, and the domestic sales market is weak. However, under the tropical trend of the reserve cotton exchange, the cotton price is expected to maintain a small upward trend.