Market Analysis: Xinjiang Cotton Enterprises Are Facing Challenges Such As Inventory Pressure

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The upward trend of the futures market after the festival brought a glimmer of light to cotton enterprises. This positive market performance has injected confidence into enterprises.

From the perspective of market supply and demand, as the processing work is about to be completed, the market resources will enter the process of de stocking, which has eased the supply pressure to a certain extent and is of great significance for stabilizing cotton prices. When the supply of cotton in the market no longer continues to increase, the price will have a stable foundation, and enterprises will no longer have to worry about the sharp drop in price due to oversupply.

The resumption of downstream textile enterprises also brought good news to the cotton market. After the festival, downstream textile enterprises will gradually resume work, and the demand for raw materials will also increase. Textile enterprises, as the main demand side of cotton, the increase of their purchase volume will directly promote the sales of cotton. Enterprises can look forward to more cooperation with textile enterprises to reduce inventory backlog.

The good operation of textile enterprises is the biggest driving force to promote cotton sales. It is reported that after the festival, cotton yarn shipments remained stable, and the price also increased. This shows that the market demand of textile enterprises is relatively stable, and there is some room for price increase. In this case, in order to meet the production demand, textile enterprises will inevitably increase the purchase of raw materials, thus further promoting the sales of cotton.

In terms of cotton sales basis, the current situation is stable. For Xinjiang machine picked cotton with 31 grade length or strength index reaching "28/29" and less impurities, the basis quotation is roughly CF2505 +(650 - 750) yuan/ton. For high-quality cotton whose length or strength index reaches "30" or above, the base quotation is 800 - 900 yuan/ Floating within ton range. These quotations are the self raised prices of Xinjiang warehouse after one month's storage expenses. The stable basis quotation provides a relatively clear price reference for the sales of enterprises and helps enterprises to formulate reasonable sales strategies.

Although Xinjiang cotton enterprises are facing challenges such as inventory pressure, the positive performance of the futures market and the gradual recovery of the downstream market have brought hope to enterprises. The enterprise is looking forward to the further improvement of the market, driving the cotton sales and improving the business situation.