Industrial Cluster: Pay Attention To The Trend Change Of Global Cotton Market

Domestic cotton is growing well, and the per unit area yield may be higher than last year. Due to the sluggish domestic and foreign consumption demand, the operating rate of textile enterprises has decreased, and it is expected that the domestic cotton price will still be under pressure. The dry weather in the United States has a certain impact on cotton growth. Rainfall in Australia has hindered cotton picking and reduced cotton quality. The impact of weather changes on cotton growth and picking may provide support for international cotton prices.

1、 Last week's price review

Last week, domestic cotton prices rose slightly, while foreign cotton prices continued to fall. On July 8-12, the average settlement price of the main contract of Zhengzhou cotton futures was 14573 yuan/ton, down 178 yuan/ton from the previous week, or 1.2%; The national cotton price B index, which represents the market price of standard lint in the mainland, averaged 15666 yuan/ton, down 105 yuan/ton from the previous week, or 0.7%.

The average settlement price of the main contract of cotton futures in New York was 70.91 cents/pound, down from the previous week 1.38 cents/pound, down 1.9%; The international cotton index (M), which represents the average landed price of imported cotton at China's main port, was 79.09 cents/pound, down 2.62 cents/pound from the previous week, and converted into 13660 yuan/ton of import cost (calculated at 1% tariff, excluding port miscellaneous and freight), down 452 yuan/ton from the previous week, a decline of 3.2%. The domestic cotton price is 2006 yuan/ton higher than the international cotton price, 347 yuan/ton higher than last week.

The average price of domestic C32 ordinary combed pure cotton yarn was 22198 yuan/ton, down 62 yuan/ton from the previous week. The average price of conventional outer yarn is 22358 yuan/ton, 46 yuan/ton higher than that of the previous week, 160 yuan/ton higher than that of domestic yarn.

2、 Recent market situation outlook

（1） International market

International cotton prices may be supported by positive news. In the past week, the range of dry weather in American cotton producing areas has expanded. The percentage of cotton growing in a "good" state has decreased by 5% to 45% from the previous week, down 3% year on year. The proportion of good seedlings in Texas, the main production area, decreased by 9%, and the proportion of poor seedlings increased by 10%. The National Weather Service of the United States issued a high temperature warning for California, Nevada, Utah, Arizona and other parts of the country.

California and Arizona are both cotton producing regions, and cotton growth in these two states is likely to continue to be affected by dry weather. It is also understood that the Australian cotton region suffered frequent rainfall during picking, and the cotton grade and quality declined. The impact of the above weather changes on cotton growth and picking may provide support for international cotton prices.

In addition, the US Department of Labor released a report on July 11 that the US CPI in June rose 3.0% year on year, lower than the 3.1% expected by the market, and the lowest level since last June. At the same time, CPI fell 0.1% month on month in June, which is the first negative growth since May 2020. The easing of inflation in the United States led to a stronger expectation of interest rate cuts in September, a weaker dollar and a general rise in commodity prices.

（2） Domestic market

New cotton is growing well, and downstream consumption is still not improving. According to the recent survey of the national cotton market monitoring system, Xinjiang's cotton is growing well on the whole and exceeds market expectations. It is expected that the per unit yield is expected to exceed last year. Due to the continuous weak demand at home and abroad, textile mills have reduced their operating rates. Some printing and dyeing plants in Shaoxing, Xiaoshan, Wujiang and other places have successively issued announcements of production suspension and rotation since late June.

In addition, according to the Financial Statistics Report for the First Half of 2024 released by the People's Bank of China on July 12, the balance of broad money (M2) was 305.02 trillion yuan, up 6.2% year on year. The balance of narrow money (M1) is 66.06 trillion yuan, down 5% year on year. The gap between M2 and M1 continues to expand, which means that enterprises' investment and residents' consumption intentions are low, which is not conducive to the recovery of cotton consumption demand.