Market Analysis: Data Showing The Future Trend Of Cotton At Home And Abroad

In the past week, the international cotton price fell in shock, the domestic cotton price adjusted in a narrow range, the internal and external price difference narrowed rapidly, and the cotton yarn price decreased more.

On March 18-22, the national cotton price B index representing the market price of standard lint in the mainland averaged 17058 yuan/ton, down 43 yuan/ton or 0.3% from the previous week; The international cotton index (M), which represents the average landed price of imported cotton in China's main ports, averaged 102.89 cents/pound, down 1.54 cents/pound from the previous week, or 1.5%; Converted into RMB, the import cost is 17738 yuan/ton (calculated by 1% tariff, excluding port miscellaneous and freight), down 265 yuan/ton or 1.5% from the previous week.

The average price of international cotton is 680 yuan/ton higher than that of domestic cotton, which is 222 yuan/ton lower than that of the previous week. The average settlement price of the main contract of Zhengzhou cotton futures was 15999 yuan/ton, up 18 yuan/ton or 0.1% from the previous week; The average settlement price of the main contract of cotton futures in New York was 92.77 cents/pound, down 1.75 cents/pound from the previous week, or 1.9%. The average price of 32 domestic ordinary combed cotton yarns is 23283 yuan/ton, down 90 yuan/ton from the previous week; The average price of conventional outer yarn is 24297 yuan/ton, 161 yuan/ton lower than the previous week, 1014 yuan/ton higher than that of domestic yarn; The average price of polyester staple fiber is 7369 yuan/ton, up 56 yuan/ton from the previous week.

Future prospects

Cotton supply turned loose and the US dollar continued to strengthen, and international cotton prices may remain weak. With the end of speculation about the tight supply of American cotton, the international cotton price continued to fall back, and the willingness of factories to purchase declined. According to the data of the US Department of Agriculture, as of March 14, the net contracted volume of US cotton in 2023/24 has remained at a low level of 103-21500 tons for four consecutive weeks.

The Brazilian National Commodity Supply Company and the Indian Cotton Association raised the cotton output estimates of Brazil and India to 3.56 million tons and 5.26 million tons respectively in 2023/24, an increase of 270000 tons and 260000 tons respectively compared with the last time. The cotton supply situation further turned loose. In addition, the US dollar index has strengthened recently and closed at 104.4332 on March 22, up 0.95% from the previous week, leading to a general decline in commodity prices.

Domestic fancy yarn sales pressure increases, cotton prices may remain weak shocks. With the recent substantial increase in cotton and cotton yarn imports, domestic cotton and cotton yarn sales are slow, and domestic cotton prices continue to bear pressure. As of February, China's cotton imports in 2023/24 were 1.75 million tons, an increase of 950000 tons year on year; The import of cotton yarn was 890000 tons, an increase of 430000 tons year on year. As of March 21, 2.852 million tons of lint had been sold nationwide, a year-on-year decrease of 1.05 million tons. The increase of textile orders in the lower reaches is limited, and on the basis of the slowdown in the sales of medium and low count yarns in the early stage, the high count yarns are also weak.

According to the recent survey conducted by China Cotton Network in Hunan and Hubei, the demand of the cotton textile industry is less than expected, the difficulty in selling yarn and subsequent products is increasing, and the enterprises maintain procurement and production on demand, and their willingness to switch to blended and differentiated varieties is increasing. On the whole, the current terminal demand is still the main driver of the cotton market. In the short term, the light production and sales in the textile sector will put pressure on cotton prices, which may remain weak.