Market Dynamics: Pay Attention To The Fluctuation Of Cotton Prices At Home And Abroad

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Consumption in the international market is still bleak, and the space for cotton price to rise is limited. In May, the PMI of US manufacturing shrank for the seventh consecutive month, falling to 46.9 from 47.1 in April. The latest Beige Book released by the Federal Reserve shows that the US economic activity has stagnated in recent weeks. Federal Reserve officials said that they generally support "skipping" an interest rate increase at the upcoming policy meeting. More and more signs show that the probability of the Federal Reserve suspending interest rate increases in June is high, and the US stock and commodity markets are rising collectively.

In terms of the cotton market, the planting speed of American cotton was increased but the progress was still slower than last year. According to the data of the United States Department of Agriculture, as of May 28, 2023, the sowing progress of American cotton in 2023 was 60%, an increase of 15 percentage points over the previous week and a decrease of 6 percentage points over the same period last year. Indian cotton farmers have become more reluctant to sell cotton, and have sold cotton stocks to increase market supply. In terms of textiles, the demand of Indian yarn mills declined, and the purchase of raw materials decreased accordingly. In the terminal market, US consumer confidence fell to 102.3 in May from 103.7 last month, hitting a six-month low.

On the whole, the market has responded to the expectation of the Federal Reserve suspending interest rate hikes, but the prospects for cotton consumption are still bleak. Whether international cotton prices can rise further in the short term depends more on the impact of weather changes on cotton growth.

Consumption in the domestic textile market has improved, and cotton prices may rise further. According to the data of the National Bureau of Statistics, from January to April 2023, the total profits of industrial enterprises above designated size nationwide decreased by 20.6% year on year; In May, the PMI of the manufacturing industry was 48.8%, down 0.4 percentage points from the previous month, and the prosperity level of the manufacturing industry fell for three consecutive months.

In terms of cotton market, according to the survey of China Cotton Network, cotton growth in Xinjiang in 2023 is generally later than that in the same period last year, and cotton farmers can recover some losses through active remedy. From the spot situation, according to the data of the national cotton market monitoring system, from May 26 to June 1, the weekly sales volume of cotton nationwide in 2022 will be 145000 tons, maintaining about 140000 tons for seven consecutive weeks; As of June 1, 6.2 million tons of lint had been sold nationwide, and the sales progress was 92.5%, up 38.7 percentage points year on year, 16.0 percentage points higher than the average of the past four years.

In the textile market, the off-season atmosphere is not prominent, and the number of orders received by some enterprises has increased rather than decreased. According to the preliminary survey of the national cotton market monitoring system, the number of textile factory director orders increased in mid May compared with the previous survey (March), reflecting that 31.6% of enterprises whose orders can last about one month, down 19.6 percentage points month on month; The proportion of enterprises whose orders can last from 1 and a half months to about 2 months accounted for 17.6%, an increase of 12.9 percentage points month on month.

On the whole, the current textile market is not weak in the off-season. In addition, cotton has begun to enter a critical growth period. Speculative funds are paying more attention to cotton, and the possibility of further growth cannot be ruled out.