Market Situation: New Flowers Are Difficult To Come Out Of Xinjiang, And The Inventory Of Cotton In The Mainland Is Low

Although from the data in September, the national cotton commercial inventory data is still relatively large, but most of the cotton in Xinjiang, the mainland cotton inventory is low, and textile enterprises themselves maintain a low inventory state this year (due to high commercial inventory, sufficient supply of cotton and cotton prices show a downward trend, low inventory risk). Therefore, after the outbreak of the epidemic in Xinjiang, Mainland textile enterprises exposed the disadvantage of low inventory - cotton is not enough. It is reported that after the national day, many local roads are restricted from leaving Xinjiang, while railway transportation is still in circulation, but the priority of cotton is lower than that of coal chemical industry and fruits and vegetables, so cotton enterprises can obtain less wagons. The tight supply of cotton in the mainland has led to a spot transaction price of more than 16000 yuan / ton.

At the end of September, the national commercial inventory of cotton was 1.93 million tons, including 1.4 million tons in Xinjiang, 160000 tons in bonded areas, and 370000 tons in inland warehouses. The inventory in the mainland was 250000 tons lower than last year, which was at the low level in the same period in recent years. In addition, according to the data of China cotton information network, as of the end of September, the industrial inventory of textile enterprises was 540000 tons, a decrease of 380000 tons compared with the same period of last year, which is also at the lowest level in the same period in recent years. The total industrial inventory of textile enterprises and the commercial inventory of the mainland were about 600000 tons lower than that of the same period last year. However, the epidemic situation in Xinjiang was more serious in October, and the cotton export from Xinjiang was limited. The textile enterprises in the mainland were facing a tight supply of cotton.

In addition, the amount of Xinjiang cotton exported from Xinjiang can also prove that there is not much Xinjiang cotton in the mainland library at present. According to the data, in the 12 months from October last year to September this year, the total cotton output in Xinjiang was about 3.3 million tons, of which 2.23 million tons were before June, and 1.07 million tons were exported from July to September. Even at the low level of cotton consumption of 7 million tons a year, it is appropriate for mainland textile enterprises to digest more than 3 million tons of Xinjiang cotton a year. Therefore, from the perspective of Xinjiang cotton export, it also proves that the cotton inventory in the mainland is indeed low.

At present, the inventory of cotton in the mainland is low and the price is high, and the transaction price is basically maintained at more than 16000 yuan / ton. Although the price of new cotton is slightly lower and the quoted price is more than 15000 yuan / ton, it is difficult for new cotton to leave Xinjiang, and the actual price for transporting to the mainland is not much different from that of old cotton. However, the current futures market price in January was only 13200 yuan / ton, which was significantly lower than the spot price.

For this state, is the spot to futures or spot to futures?

First of all, the shortage of cotton in the mainland is not a long-term shortage, but due to the slow progress of the epidemic situation and transportation restrictions. Once the transportation problems are solved, the cotton prices in the mainland will probably drop after a large number of new cotton from Xinjiang is transported out. From the current actions of Xinjiang government to protect Xinjiang cotton processing and transportation, etc, In the future, the impact of Xinjiang epidemic on cotton will gradually weaken, and cotton will gradually return to the fundamentals.

Secondly, although the price of the futures contract in January is low, it represents the spot price of cotton in Xinjiang benchmark delivery warehouse in January, which can not represent the current price of cotton spot in mainland China. Moreover, the futures price is more affected by pessimistic consumption expectation, which is an expected price, so it is different from the current cotton spot price, However, considering that the current spot price is indeed significantly higher than futures and the acquisition cost of new cotton also increases, there is not much room for the contract to go down in January in the short term.

The most important thing is that from the perspective of the supply and demand structure of cotton itself, cotton production has increased this year, while the consumption pressure is relatively large. In addition to the negative impact of the domestic epidemic situation, there is also the impact of the global economic downward pressure. In addition, the United States' sanctions on Xinjiang cotton products and the possible EU sanctions on Xinjiang cotton in the future have brought great negative impact on the cotton consumption side, Therefore, in the medium and long term, cotton prices are weak.