Market Analysis: Expected Price Of New Cotton At Home And Abroad

This week, the center of gravity of cotton prices at home and abroad moved down; The price of domestic cotton yarn fell slightly, while that of foreign yarn rose slightly; The price of polyester staple fiber continued to rise.

　　 1、 Weak domestic cotton price shocks

Cotton picking is about to begin. In view of the fact that this year's picking time is more than one week later than previous years, whether Xinjiang's frost fall time is ahead of schedule has become the focus of the market; The downstream market enters the traditional peak season, but the order increment of enterprises is limited. On September 11-15, 2023, the average settlement price of the main contract of Zhengzhou cotton futures was 17177 yuan/ton, down 278 yuan/ton from the previous week, or 1.6%; The national cotton price B index, which represents the market price of standard lint in the mainland, averaged 18061 yuan/ton, down 120 yuan/ton from the previous week, or 0.7%.

　 2、 The center of gravity of international cotton price moves down slightly

The expectation that the Federal Reserve may suspend interest rate hikes in September and the US Department of Agriculture will continue to reduce global and US cotton production are two major bullish factors for recent international cotton prices. However, as the recovery of demand in the downstream market is still less than expected, the international cotton price has not effectively broken the upper limit of box shocks. On September 11-15, 2023, the average settlement price of the main contract of cotton futures in New York was 87.69 cents/pound, up 0.28 cents/pound or 0.3% from the previous week; The international cotton index (M), representing the average landed price of imported cotton in China's main ports, averaged 98.25 cents/pound, down 1.06 cents/pound from the previous week, or 1.1%; Converted into RMB, the import cost is 17166 yuan/ton (calculated by 1% tariff, excluding port miscellaneous and freight), down 184 yuan/ton or 1.1% from the previous week. The domestic cotton price is 895 yuan/ton higher than the international cotton price, and the price difference is 64 yuan/ton larger than the previous week.

　　 3、 The price of domestic cotton yarn fell slightly, while that of foreign yarn rose slightly

Seasonal orders have led to an improvement in cotton yarn shipments, textile mills have depressed prices and raw material prices have declined, leading to a slight decline in domestic cotton yarn prices. The price of outer yarn is relatively firm with the trend of outer cotton, and the current conventional outer yarn is 10 yuan/ton lower than the domestic yarn. Domestic grey cloth market sales remained light, and cotton prices remained stable. Polyester staple fiber prices continued to rebound.

　 4、 Future prospects

American cotton began to harvest, and international cotton prices lacked the momentum of big rise. The US economic data released on the 14th was higher than expected, and the number of initial claims for unemployment benefits also remained low, indicating that the US economy continues to maintain strong resilience, and the path of the Federal Reserve to fight inflation may be more rugged in the future. In terms of the cotton market, the harvest of American cotton began one after another, and the weather showed signs of improvement, which may improve the growth of some American cotton. As of September 10, 29% of American cotton had grown well, 2 percentage points less than the previous week; The harvest progress of American cotton was 8%, unchanged from the same period last year. Recently, the rainfall in Indian cotton producing areas is insufficient. The Meteorological Bureau predicts that the rainfall in Maharashtra and Gujarat will be lower than normal, which may affect Indian cotton production. The speed of destocking in the end consumer market has slightly accelerated, but it still takes time to transmit to the supply market in Southeast Asia. By July 2023, the retail sales of clothing in the United States had been stable in the range of $25 billion to $26 billion for six consecutive months; The clothing inventory of American wholesalers further decreased to US $36.413 billion, down 11.27% year on year and 3.33% month on month. The recent month on month decline has expanded. At present, American cotton is beginning to harvest, the weather has improved, and the international cotton price lacks the momentum to rise significantly. The Federal Reserve's interest meeting is coming next week, focusing on the impact of the external market on the cotton price trend.

The "golden nine and silver ten" is not prosperous, Xinjiang cotton harvest is imminent, and domestic cotton prices are under pressure. According to the data of the National Bureau of Statistics, the added value of industries above designated size increased by 4.5% in August, 0.8 percentage points higher than that of the previous month, and industrial production accelerated; The textile industry increased by 1.4%, 1.6 percentage points higher than that in July. In terms of cotton market, according to China Cotton Network, considering the cotton growth and weather conditions in Xinjiang, some areas in northern Xinjiang have started spraying machine picking defoliant, and picking will begin at the end of September at the earliest. As the current mainstream price of seed cotton purchase in the mainland is 8.6-8.8 yuan/kg, which is higher than the expectation of Xinjiang Ginning Factory, it is not ruled out that some enterprises may passively delay the opening of the scale purchase. In the textile market, after entering the traditional peak season, the weaving mill replenishes the stock and the yarn starts. Due to the high pressure of yarn inventory in the link of traders, some cotton yarn trading enterprises cut prices before textile mills, which is expected to be difficult to increase yarn prices. On the whole, the textile market is not prosperous in the "golden nine and silver ten" period. Xinjiang cotton is about to harvest. The rotation of superimposed reserve cotton will continue, and the domestic cotton price will continue to operate under pressure.

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