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Market Analysis: Why Cotton Prices Remain High In 2022

2022/4/13 10:34:00 0

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In recent 2022, the domestic cotton price continued to be high, and has been maintained at around 23000. In 2020 and 2021, there are obvious low prices, especially in 2020, the first year of the outbreak, when the cotton price directly fell to 11000, and the futures price fell below 10000 when it was the lowest. This price was acceptable to the spinning mills at that time, because the profits of the mills were also increasing year by year, but there was a loss this year. I will give you a detailed analysis later.

For now, why is the price so high?

This is due to the current high cost of cotton, and downstream demand did not show. Especially in the textile peak season of the lower reaches of the golden three silver four, there was a phenomenon that the peak season was not prosperous, and it was a continuous downturn.

This paper makes a simple comparison, and analyzes the situation that the prices of cotton in the main supply and marketing areas in Xinjiang, including the provinces in the mainland, have risen by more than 30% or even 40%. The annual rise and fall of 6000, the average price is about 6700.

The current price is short-term, stable and rising situation, but the downstream demand is very low, making the market delivery is not smooth. From September 2021 to now, the cumulative processing capacity of Xinjiang has exceeded 5.3 million tons. The sales progress of cotton is only 39%, only 40%. Although some cotton ginning plants have strong willingness to support the price, there will be a repayment pressure in April. Therefore, the situation of some cotton ginning plants will have obvious sales in the near future.

The quotation of the mainland real estate cotton has been very stable, mainly reflected in Shandong and Hebei, about 21000-21500. The real-estate cotton in Hebei is mainly four seasons cotton. The average price of Shandong is 21500, and Hebei is between 21000 and 22000. For example, Tangshan can reach 21800, and Hengshui can only sell about 21000. Because last year's planting period, there was a lot of rain, which made the water content higher. The cotton planting situation this year is not optimistic. I will tell you in detail later. It is about the price situation in the past three years.

In recent three years, the trend of cotton futures price and spot price is basically positive correlation, of course, there will be price difference. Recently, the price difference has narrowed slightly, but it has been greatly enlarged compared with last year. In the same period of last year, the price difference was only about 500-1000, and the current domestic cotton commercial inventory processing sales link showed a significant slowdown, another is higher than the same period last year. however_ , _the_recent_domestic_epidemic_prevention_and_control_upgrading_has_caused_problems_in_raw_material_transportation_in_some_markets_ , _including_shutdown_and_holiday_of_some_textile_enterprises_and_the_impact_of_epidemic_prevention_policies_in_various_provinces_ , _which_have_a_certain_impact_on_raw_material_transportation_ ._

In 2020, Zheng cotton warehouse receipts set a record high, but from 2021 to the present, that is, the first quarter of 2022, it has been maintained in a state of shock and depression. As of March 27, the registered warehouse receipts of zhengmian were 18037, and the effective forecast was 593. The total amount of warehouse receipts and forecasts was 18630, equivalent to 745200 tons of cotton.

This data is a brief climb from the end of October last year to the present, which is the same as that of the same period last year. Recently, the growth rate has slowed down. The main reason for the slowdown is that a cotton ginning plant in Xinjiang still has a large supply of cotton, forming a backlog, and the repayment pressure is obvious. Although the current Zheng cotton futures have a small rise, but still with Xinjiang ginning plant cost gap. Therefore, if Xinjiang ginning plant wants to sell, hedge and sell futures, there is an obvious price gap. Therefore, compared with last year, it is not as expected.

Back to the recent shocking news, the national development and Reform Commission (NDRC) released on March 12, in order to guarantee the cotton demand of textile enterprises, the national development and Reform Commission issued the first batch of domestic cotton tariff tax discount import quota in 2020, that is, the import transfer tax quota of 400000 tons.

Judging from this announcement, it is different from that of previous years in two aspects. The first aspect is that the announcement time should be earlier than the time node of nearly five years; The second is that the quota of cotton import in 2020 will be 400000 tons, which will be issued to non-state-owned trade enterprises and limited to the import of processing trade, so as to guarantee the cotton demand of processing trade level. Compared with last year, the quantity is reduced by 300000 tons, and there is no mention of unrestricted trade mode. However, different from last year, the announcement pointed out that this batch of quotas may evaporate according to the needs of the market in the future. Judging from this announcement, the country's determination to stabilize domestic cotton prices is very big.

Flower can only buy some low-cost cotton to make up for the loss of profits. That is to say, the first is to use quotas, the second is to use some of the national cotton reserves, and the third is to use some local cotton as cotton blending, that is to say, to use these three ways to reduce costs and adjust its industrial structure.

Generally speaking, policy regulation and control plays a key role in the smooth operation of our domestic market. However, we also know that if the operation of the commodity market is to continue to be good, it still needs the help of consumption. Therefore, the consumption demand of our downstream is a key point worthy of our attention.