Market Dynamics: The Analysis Of The Sharp Decline Of Zheng Mian'S Warehouse Receipts Is Mainly Affected By Three Factors

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China Cotton News: According to statistics, as of September 30, there were 5251 warehouse receipts issued by Zheng Mian, a significant decrease of 3842 from the end of August (9093 warehouse receipts issued by Zheng Mian on August 30, 2024), with a month on month drop of 42.25%. It is rare for warehouse receipts to flow out so quickly in just one month.

From the data, the decrease of warehouse receipts in the mainland delivery warehouse is significantly higher than that in Xinjiang delivery warehouse. Cotton consumption in Jiangsu, Henan, Shandong and other places is particularly prominent. High index warehouse receipts have attracted more attention from mainland cotton related enterprises.

Why did Zheng Mian's warehouse receipts decrease by more than 40% month on month in September? The industry analysis is mainly affected by three factors:

First, the remaining "late price" contracts were successively concluded. In 2023/24, Xinjiang cotton processing enterprises will use the "post pricing" sales model to account for a relatively high proportion of transactions, and the latest pricing period will be concentrated from August to September 2024.

On the one hand, with Zheng Mian's CF2501 contract breaking the 14500 yuan/ton threshold, Xinjiang cotton enterprises finally ushered in the opportunity to rebound the price point. The remaining price point contracts were concluded one after another, and the ginning factory took the initiative to cancel the warehouse receipt;

On the other hand, even if Xinjiang processing enterprises are unwilling to count the price, traders, textile mills and other buyers will force the price to be counted to make the contract perform.

The second is the transitional replenishment of some inland cotton enterprises. As the launch of new cotton in 2024/25 is delayed by 7-10 days compared with the expected date (machine picked cotton in North Xinjiang), and the fear of a big return of machine picked cotton in the early stage of listing is not conducive to spinning and cotton blending, some textile enterprises in and outside Xinjiang passively start the mode of replenishing raw materials such as cotton in the middle and late September. Compared with commodity cotton, warehouse receipt cotton has good storage conditions and guaranteed grade quality indicators. In addition, the current price of domestic cotton has increased to more than 1200 yuan/ton, so warehouse receipt cotton is favored by textile enterprises.

Third, in order to improve efficiency and reduce costs, a small number of cotton trading enterprises voluntarily cancelled warehouse receipts. In the context of the increase in the "upside down" of the current and future prices of cotton, the higher than expected lint cost in 2024/25, and the continued recovery of textile and clothing exports, cotton enterprises chose to cancel warehouse receipts to facilitate the later spot sales operations.