Market Observation: Price Dynamics Of Domestic Cotton Market In The Recent Week

Last week (November 11-15), affected by factors such as the continuous rise of the US dollar and the fund's position transfer before delivery, the price of ICE cotton's main contract hit a new low in nearly three months. The processing progress of domestic new cotton was accelerated, the supply remained loose, the downstream demand was weak, and the cotton price was weak.

The average settlement price of the main contract of Zhengzhou cotton futures was 14075 yuan/ton, up 9 yuan/ton or 0.1% from the previous week; The national cotton price B index, which represents the market price of standard lint in the mainland, averaged 15363 yuan/ton, down 21 yuan/ton or 0.1% from the previous week.

The average settlement price of the main contract of cotton futures in New York was 70.77 cents/pound, down 1.90 cents/pound from the previous week, or 2.6%; The international cotton index (M), which represents the average landed price of imported cotton at China's main port, was 80.5 cents/pound, down 0.74 cents/pound from the previous week, and converted into RMB import cost of 13908 yuan/ton (calculated at 1% tariff, excluding port sundries and freight), down 128 yuan/ton from the previous week, down 0.9%.

The domestic cotton price is 1455 yuan/ton higher than the international cotton price, and the price difference is 108 yuan/ton larger than the previous week. The average price of domestic C32S combed pure cotton yarn was 21531 yuan/ton, down 94 yuan/ton from the previous week. The average price of conventional outer yarn is 22401/ton, down 99 yuan/ton from the previous week. The price of polyester staple fiber is 7081 yuan/ton, down 16 yuan/ton from the previous week.

（1） International market

The US dollar index remains strong and the seasonal supply pressure of cotton remains. International cotton prices may continue to be under pressure. Due to the overall strength of the recently released US economic indicators and the strong trend of the US dollar, the negative impact on commodity prices has been brought. At the same time, in view of the abundant cotton supply in the international market, it is expected that the international cotton price will continue to be under pressure in the short term.

Data from the US Department of Labor showed that the core inflation rate rose 0.3% month on month for the third consecutive month in October, up 3.3% year on year; Retail sales in October grew 0.4% month on month, higher than market expectations. After Trump won the election, the dollar index continued to strengthen, rising to around 107 on the evening of the 14th, approaching the highest point in a year, resulting in the weak operation of most commodity prices. The overall progress of American cotton picking is still faster than that of the same period last year. According to the report of the U.S. Department of Agriculture, as of November 10, the American cotton harvest rate was 71%, 7 percentage points faster than that of the same period last year.

The Brazilian Cotton Growers Association reported that as of November 8, Brazil's cotton processing rate in 2024 was 77%. The main contract of ICE futures is approaching the delivery period, and the delivery inventory has increased significantly. According to the data of the Intercontinental Exchange (ICE), as of November 14, the delivery inventory was 12064 bales, 11890 bales more than last week, indicating that the cotton spot supply remains sufficient.

（2） Domestic market

The cotton supply situation is loose, and the cotton price may remain weak. The picking of domestic new cotton is basically finished, the processing is at the peak, and the cotton inspection progress continues to be faster than the same period in previous years. At the same time, after the textile market entered the traditional off-season, the demand of the textile market has weakened, and some yarn mills reduced their prices but the turnover was not ideal.

The above situation has led to an increase in supply pressure at different stages. It is expected that cotton prices will maintain weak consolidation. According to the data of China Fiber Quality Monitoring Center, as of November 14, the national inspection volume of new cotton was 2.4 million tons, an increase of 460000 tons year on year. The transfer of Xinjiang cotton to the mainland was significantly ahead of the same period last year. According to the statistics of relevant departments, the export volume of Xinjiang cotton in October was 310000 tons, an increase of 220000 tons year on year.

In addition, the cotton warehouse receipts of Zhengshang Exchange in 2023/24 will enter the compulsory cancellation time, and will be transferred to spot goods. At present, there are 2281 old cotton warehouse receipts, equivalent to 91000 tons of cotton. According to the survey of the national cotton market monitoring system, the operating rate of textile enterprises surveyed in early November was 81.5%, down 0.3 percentage points month on month; The yarn production and sales rate was 99.2%, down 3.9 percentage points month on month.