Market Analysis: China Cotton Market Trend Analysis Within One Week

China Cotton Market Weekly (April 22-26, 2024)

The prices of cotton and cotton yarn at home and abroad fell across the board, but the fluctuation range of international cotton prices narrowed significantly within the week. From April 22 to 26, the average settlement price of the main contract of Zhengzhou cotton futures was 15796 yuan/ton, down 375 yuan/ton from the previous week, or 2.3%; The national cotton price B index, which represents the market price of standard lint in the mainland, averaged 16802 yuan/ton, down 243 yuan/ton from the previous week, or 1.4%.

The average settlement price of the main contract of cotton futures in New York was 81.56 cents/pound, down 0.68 cents/pound from the previous week, or 0.8%; The international cotton index (M), which represents the average CIF price of imported cotton in China's main ports, averaged 89.91 cents/pound, down 2.24 cents/pound or 2.4% from the previous week. Converted into RMB, the import cost is 15485 yuan/ton (calculated by 1% tariff, excluding port miscellaneous and freight), down 387 yuan/ton or 2.4% from the previous week. The average price difference of cotton at home and abroad is 1317 yuan/ton, 144 yuan/ton more than the previous week. The average price of domestic C32 combed pure cotton yarn was 22973 yuan/ton, down 109 yuan/ton compared with the previous week, and the average price of conventional external yarn was 23009 yuan/ton, down 210 yuan/ton compared with the previous week.

2、 Future prospects

There are many uncertain factors, and the international cotton price may maintain consolidation. Cotton planting in the northern hemisphere is under way, and the supply side may get more attention. Affected by the El Nino phenomenon, the drought in the north, east and southwest of India has increased; Pakistan has suffered continuous heavy rainfall since April 13, and some cotton producing areas have been affected.

In terms of macro economy, the data from the US Department of Commerce showed that the core personal consumption expenditure (PCE) of the US in the first quarter increased by 3.7% on a quarter on quarter basis. The sharp rise in inflation rate again suppressed the expectation of the Federal Reserve to cut interest rates. In addition, Israel intensified its concern about the Galafat air strike, which increased the market's concern about crude oil supply. Although the bad news of the international cotton price has been released to a certain extent after a sharp correction, and the weekly sales volume of American cotton has also rebounded, the international cotton market is faced with many uncertainties, and the international cotton price is highly likely to maintain its consolidation trend.

The difference between domestic and foreign cotton prices has climbed, and domestic cotton prices may remain weak. Due to the sharp drop in the international cotton price and the relatively small drop in the domestic cotton price, the difference between the internal and external cotton prices has rapidly increased, currently around 1300 yuan/ton. In terms of supply, according to customs data, the import volume of cotton and cotton yarn increased significantly in March. The import volume of cotton was 400000 tons, up 4.5 times year on year, and the import volume of cotton yarn was 190000 tons, up 35.2% year on year.

At the same time, the recent transfer of Xinjiang cotton and cotton yarn to the mainland showed an increasing trend. In terms of demand, domestic textile enterprises can still maintain a high level of start-up, but downstream textile orders are weakening. With the approaching of the traditional off-season, and the increasing demand for alternative blended fabrics, the number of enterprises that switch to production or reduce their start-up capacity in the later period may increase. In the case of sufficient supply and weak demand, cotton prices are expected to maintain weak consolidation in the near future.