Analysis Of Various Factors Leading To Cotton Price Decline

This week, domestic cotton prices rose and fell, and the average price was still higher than last week's level; International cotton prices fell significantly. Domestic and foreign cotton yarn prices rose first and then fell; Polyester staple fiber prices fall.

1、 Domestic cotton prices rose and fell back, with average prices higher than last week's level. This week, the rising bulk commodities attracted attention. On May 12, the executive meeting of the State Council called for "effective response to the rapid rise of commodity prices and its associated effects", Shanghai Futures Exchange, Dalian Commodity Exchange, Shanghai Futures Exchange, Dalian Commodity Exchange, Shanghai commodity exchange, Dalian Commodity Exchange, Shanghai Futures Exchange, Dalian Commodity Exchange, Shanghai Futures Exchange, Dalian Commodity Exchange, etc Zhengzhou Commodity Exchange has implemented a number of measures such as increasing the margin ratio of several futures varieties to ensure the smooth operation of the market, and the domestic cotton price fell with the commodity market. From May 10 to 14, 2021, the average settlement price of main cotton futures contracts in Zhengzhou Commodity Exchange was 15951 yuan / ton, up 33 yuan / ton or 0.2% over the previous week; The average price of national cotton price B index, which represents the market price of standard grade lint in mainland China, was 15985 yuan / ton, up 100 yuan / ton or 0.6% over the previous week.

2、 International cotton prices fell this week, US inflation data rose sharply to a 12-year high, increasing investors' expectations of the US Federal Reserve's monetary policy tightening. The superposition of Palestinian Israeli conflict led to the drop of oil price and the improvement of weather in Texas, USA, which significantly reduced the international cotton price. From May 10 to 14, 2021, the average settlement price of Cotton Futures (ice) main contracts of Intercontinental Exchange was 87.36 cents / pound, down 1.16 cents / pound or 1.3% compared with the previous week; The average price of international cotton index (m), representing the average CIF price of China's main ports, was 93.65 US cents / pound, down 0.33 cents / pound or 0.4% compared with the previous week. The import cost of RMB 15186 yuan / ton (calculated by 1% tariff, including port miscellaneous and freight), decreased by 51 yuan / ton or 0.3% compared with that of the previous week. The international cotton price was 748 yuan / ton lower than that of domestic cotton price, and the internal and external price gap was increased by 99 yuan / ton compared with last week.

3、 Domestic and foreign cotton yarn prices rose first and then fell, and the average price was higher than last week's level. At the beginning of the week, domestic cotton yarn market inquiry and sales trading improved, mainly focusing on conventional varieties, supporting the rise of domestic cotton yarn price. With the fall of zhengmian, the transaction volume of pure cotton yarn decreased, and the price fell again; After the fall of international cotton price, the price of outer yarn showed a trend of stop rising and falling. At present, the price of printed yarn is stable and weak, while the price of Vietnam's combed yarn is mainly stable, and the transaction center is downward; The price of conventional Indian yarn is 383 yuan / ton lower than that of domestic yarn. The domestic downstream fabric market lofting, inquiry increased, yarn price rise promoted cotton price rise, market sales did not significantly improve; Polyester staple fiber with raw material PTA fell.

Price change of cotton yarn, cotton cloth and polyester staple yarn at home and abroad from May 10 to 14, 2021 unit: month on month rise and fall range: China's c32s combed yarn average price yuan / ton 24935 + 315 + 1.3% + 6133 + 32.6% India's c32s combed yarn average price yuan / ton 24552 + 143 + 0.58% + 5490 + 28.8% China India cotton yarn price difference yuan / ton 383 + 143--1.4d × 38mm polyester staple fiber (cotton type) yuan / ton 6911-52-0.7% + 1285 + 22.8% China 32 cotton twill fabric yuan / M 5.92 + 0.04 + 0.7% + 1.36 + 29.8% (data source: national cotton market monitoring system)

4、 Looking forward to a new record of global inflation and weakening of international cotton price momentum. Last week, the number of people applying for unemployment benefits in the United States hit a new low since the outbreak. PPI rose more than expected in April. Fed officials continued to play down inflation concerns, which was questioned by the market. Risky assets were sold off, and the commodity market with a large increase was also implicated. The focus of the international cotton market turned to the next year's expectation. The US cotton planting progress accelerated significantly, but fell behind the same period last year. As of May 9, the US cotton planting progress was 25%, 9% higher than the previous week and 5% lower than the same period last year; New cotton planting is in progress in northern India. According to the latest data of the US agricultural counselor, India's cotton production is expected to increase by 4% in 2021 / 22; After the Eid al Fitr holiday, new cotton planting in Pakistan will accelerate. Although the US Department of agriculture lowered the end of 2021 / 22 inventory this week, it is estimated that global production will rise by 5.6% in 2021 / 22, and consumption will only rise by 3.47%. The global cotton inventory consumption ratio will decrease from 79.35% in 2020 / 21 to 74.9% and 95% in 2019 / 20. The inter annual decline of inventory consumption ratio will be significantly slowed down. In addition, a new coronavirus, which has recently spread in India, has spread to more than 40 countries and regions, casting a shadow on the global cotton consumption prospects.

To sum up, the global economic recovery is still continuing, the risk of financial market bubble is further revealed, and the driving force of international cotton price rise is weakened. The domestic cotton market entered a period of oscillation and wait-and-see. On May 11, the people's Bank of China issued a report on the implementation of China's monetary policy in the first quarter of 2021. It pointed out that China's import inflation risk is controllable on the whole, and it is necessary to pay close attention to the differential impact of commodity price rise on different industries and enterprises in China. Comprehensive measures should be taken to ensure price stability, timely and effective management of expectations, and to prevent market price fluctuations from being out of order.

In terms of the domestic cotton market, the temperature in Xinjiang will decline in the coming week. The industry believes that the overall situation of cotton fields in Northern Xinjiang is acceptable, and some areas in southern Xinjiang have sandstorm weather, and the seedlings grow normally. Cotton inventory of processing enterprises continued to decrease. According to China's cotton output of 5.95 million tons in 2020 announced by the national cotton market monitoring system, as of May 8, the cotton inventory of cotton processing enterprises in China was 229000 tons, compared with 1.03 million tons in the same period of last year.

Port inventory continued to increase. According to the data of Zhangjiagang cotton chamber of Commerce in Jiangsu Province, the total cotton inventory in Zhangjiagang this week was 88594 tons, up 1.6% compared with last week. Downstream cotton yarn market differentiation, some enterprises received orders at the end of May, downstream weaving mill orders changed little. Considering that may is the traditional off-season and terminal demand is expected to be limited, traders' inventory may increase. In addition to the recent domestic recurrence of local cases, market sentiment tends to be more positive, it is expected that the short-term domestic cotton market will enter the wait-and-see period again.