Market Analysis: Review Of Cotton Market Price Trend In 2021

?

Before the Spring Festival holiday, textile enterprises' demand for stock preparation and replenishment increased, and cotton transactions improved slightly. However, affected by the repeated epidemic situation and the opening of some downstream textile factories, the downstream orders continued to be weak, coupled with the continuous loss of yarn profits, the high cost supported cotton price could not transmit to the downstream, and the contradiction still existed. It is expected that the short-term cotton price will continue to fluctuate in the range.

In the current period of return to the main logic continuation and the U.S. cotton overall downward pressure is limited, it is expected that the short-term domestic and foreign cotton prices will still maintain a range of volatility.

Under the influence of higher crude oil and US stock markets, strong market expectation on demand, and return to logical dominance, cotton prices at home and abroad this week were strong and volatile. From the overall operation of the market, with the Spring Festival holiday approaching, the downstream stock replenishment support, the goods have improved compared with the previous period, which has a certain support for the rise of zhengmian. However, the terminal orders are weak, some manufacturers in the later period have begun to have holidays, the finished product inventory is still high, the downward transmission contradiction of high cotton price is still in existence, and the short-term market is expected to continue to fluctuate. As the international cotton price increase is higher than domestic, the difference between domestic and foreign cotton prices continues to narrow.

Zheng cotton rise led to a small increase in spot prices, textile enterprises just need to make up the stock purchase increase

Domestic cotton spot price rose slightly driven by the rise of Zheng cotton, but the adjustment range was not large, most of which was around 5000 yuan / ton. The cf205 contract base price difference of medium and high-grade resources in Xinjiang is 2000-2500 yuan / ton, and that of medium and low-grade cotton resources is 450-700 yuan / ton. The quotation of medium and high-grade resources is firm, and the quotation of some low-level resources has been lowered. At present, the fixed sales price of 3128 / 29 Xinjiang lint is mostly 22000-22600 yuan / ton according to the strength of the index. Due to the approaching holiday, at the same time, the early inventory consumption of the mill is more, the demand for replenishment in the near future has increased, and the cotton trading volume has increased.

?

In the near future, the growth rate of Xinjiang cotton processing capacity has gradually slowed down. According to our website, we have established a model based on Xinjiang cotton processing data over the years and brought in the latest data forecast. In January 2022, Xinjiang's daily cotton processing capacity will drop to about 10000-30000 tons, which is expected to come to an end in mid March, and the final lint processing capacity may be 5.3 million tons. New cotton sales, sales progress is still slow. In addition, at this stage, most of the cotton farmers are more active in the preparation of arable land in the near future in order to avoid a sharp rise in chemical fertilizer after the festival.

?

International market: higher peripheral market & strong expected demand and strong US cotton shocks

?

Last week American cotton overall strong shock. After the peripheral crude oil and US stock markets rose, the number of jobless claims decreased last week and the strong retail data were released, the market's worries about the Omicron variant virus eased. In addition, the situation of US cotton export and shipment in recent weeks has improved significantly compared with the previous period, and the overall tight supply and demand situation remains unchanged, the unpriced contract high and the spot basis continues to be strong, Ice's March contract rose 1.35 cents to settle at 114.34 cents a pound on Thursday, hitting a month high of 115.33 cents. Friday in the peripheral market general drop drag, ice cotton has a correction. Overall, there is no obvious good news on the fundamentals, ice cotton in the week driven by the external market sentiment continued to shock. During the week, the average settlement price of ice cotton main contract was 112.45 cents / pound, up 4.4% over the previous week; Spot price 127.38 cents / pound, up 2.9% month on month.

From the perspective of major countries, the average spot price of Indian cotton rose to INR 69000 / Kandi during the week, an increase of about 4% compared with last week. According to the cotton Federation of India, India's cotton production is expected to exceed 6 million tons in 2021 / 22, and the export demand continues to be strong. In the United States, soil drought in the western cotton region remained in the week, and cotton farmers urgently needed more precipitation to improve soil moisture in the future. Among them, the rainy and snowy weather pattern greatly improved soil moisture in the Delta region; There is a probability of continuous rainfall in the southeast cotton region in the future, and there is no adverse effect due to the completion of picking work. In Pakistan, there are few seed cotton stocks left in Pakistan's cotton farmers' hands, and the ginning plant will finish processing this year in succession. This year, the total production is expected to be 1.22 million tons, an increase of 24% over the previous year (980000 tons). In addition, the record purchase price and high yield in major cotton areas have brought rich returns to cotton farmers. In the later stage, if weather conditions permit and irrigation water is abundant, early sowing cotton field may start sowing in February.

?

Last week cotton yarn market transaction slightly improved, yarn prices continue to be weak shocks. Due to the approaching of the Spring Festival, cotton yarn transaction slightly improved under the pull of downstream stock replenishment demand. Traders and mills are mainly to de stock, return funds, shipping mentality is relatively strong. However, the overall cost transmission of the industrial chain is not smooth and the uncertainty of the future market expectations is strong, which leads to serious deadlock in the following links. In addition, some cotton mills in the early stage of consumption of cotton stocks were exhausted, but a small number of purchases to replenish the warehouse, the overall cost of cotton consumption rose, and the mills were still in a state of loss. According to the feedback from the enterprises, at present, some back weaving and printing and dyeing factories have begun to have a holiday, and the cotton mills are expected to have their holidays in the first ten days of January. In terms of price, affected by the downstream replenishment demand and the de stocking of yarn mills, the focus of cotton yarn trading moved up slightly. Although some merchants raised the price by about 200 yuan / ton, the actual transaction still yielded profits. The price of ring spinning with high configuration of comber 32S is about 28000-29000 yuan / ton; The average price of 40s ring spinning is about 30000-31000 yuan / ton.

?

Last Monday and Tuesday, affected by the rising cost and the downstream just need to replenish the warehouse, the production and sales of polyester staple fiber market showed a temporary recovery. As of Friday, the mainstream quotation of 1.4d manufacturers in Jiangsu and Zhejiang market was about 7050-7300 yuan / ton, the actual price was about 6850-7100 yuan / ton, and the price was up about 100 yuan / ton during the week. Viscose market, downstream basic sign off completed, follow-up or to collect delivery. The quotation of mainstream chemical fiber factory is almost unchanged, and the price adjustment action exists in the middle end chemical fiber factory. The price of high-end goods is 120002200 yuan / ton, that of middle end goods is 11800-12500 yuan / ton, and that of dealers and traders is 12300-12600 yuan / ton. There is limited room for negotiation. During the week, the price difference between cotton and non cotton fiber remained high, and the price difference of cotton and polyester was 15031 yuan / ton, slightly narrowed than that of last week; The price difference of cotton stickiness was about 9965 yuan / ton, which continued to expand compared with last week.

?

expectation

?

From the macro level, the new coronavirus Omicron continues to spread, and the number of new confirmed cases in the global day has exceeded one million for three consecutive days. We should pay attention to the impact of the late epidemic situation on global economic and trade activities and investor sentiment. In addition, with the expiration of the first phase of the Sino US economic and trade agreement, the United States frequently makes unreasonable remarks and acts, and the two countries' relations are getting tighter and pay attention to the trend of relations in the new stage.

?

From the perspective of industry operation, although before the Spring Festival holiday, textile enterprises' demand for stock preparation and replenishment increased, and cotton transactions improved slightly, due to the repeated epidemic situation and the opening of some downstream textile factories, the downstream orders continued to be weak, coupled with the continuous loss of yarn profits, the cotton price supported by high cost could not transmit to the downstream, and the contradiction still existed, It is expected that the short-term cotton price will continue to fluctuate.

?

Overall, in the current period of return to the main logic continuation and the United States cotton overall downward pressure is limited, it is expected that the short-term domestic and foreign cotton prices will still maintain a range of volatility. However, it is necessary to pay attention to the periodic impact of sudden factors. In the medium and long term, it is expected to hold cautious optimism for the time being.

?