On Friday, Zheng cotton’s entire contract closed at the daily limit, and the price of the main cotton hit its highest level in more than ten years. Cotton yarn futures followed closely, and its main contract once hit the daily limit. The domestic new cotton purchase market is heating up again, with prices in some areas of northern Xinjiang returning to around 11 yuan/kg, and the bullish enthusiasm in the futures market has been reignited.
Overnight ICE cotton futures closed more than 3% higher, ending a four-day losing streak, helped by technical buying Generally positive sentiment in the disk and commodity markets. The December cotton contract closed up 3.24 cents, or 3.12%, with a settlement price of 107.10 cents per pound. It rose more than 4% earlier and hit the daily limit to 107.86 cents per pound. Analysts said the market’s focus now turns to the U.S. Department of Agriculture’s weekly export sales report due out on Friday. The report has now become a key indicator for the market in assessing demand in China, the largest consumer.
The domestic new cotton purchase market is heating up again. Cotton farmers are still reluctant to sell. The game with ginners continues, and the purchase price of seed cotton has rebounded. According to China Cotton Information Network, on October 14, some ginning mills in northern Xinjiang began to gradually increase their purchase prices. The purchase price of machine-picked cotton is generally 10.6-10.8 yuan/kg, and a few are 11-11.3 yuan/kg. Some cotton farmers believe that there is still room for continued growth and plan to continue to wait and see.
High cotton prices have attracted the attention of relevant departments. On October 14, Wang Jianjun, Director of the Economic and Trade Department of the National Development and Reform Commission, led a team to Dezhou City, Shandong Province to conduct a special survey. The research team conducted an on-site inspection of the central reserve directly under the China Cotton Reserve Dezhou Company. Wang Jianjun pointed out that the current domestic cotton reserve resources are sufficient and the supply is generally guaranteed. However, domestic cotton prices have recently been too high, exceeding the affordability of downstream companies, and market risks continue to accumulate. To this end, cotton market regulation will be further strengthened to guide cotton prices back to a reasonable range.
Cotton is crazy on the market and polyester chain is rising to the daily limit
When Zheng Cotton hit the daily limit on Friday, the substitution effect of consumption caused the polyester chain to rise from the bottom up. The short fiber contract in recent months once hit the daily limit, and the main force closed at a new listing high of 8,458 yuan. Upstream raw materials PTA and ethylene glycol both surged, making up for the losses caused by the mid-week flash crash. PTA closed at 5,540 yuan, and ethylene glycol closed at the daily limit, closing at 6,959 yuan.
Jiangsu and Zhejiang have once again started production suspension restrictions Electricity
Power restriction and production restriction have been the main theme of many major textile provinces recently. In the National Development and Reform Commission’s barometer of the completion of dual energy consumption control targets in various regions in the first half of the year, textiles such as Guangdong, Fujian, and Jiangsu Important towns are in Level 1 alert, and major textile provinces such as Zhejiang and Xinjiang are in Level 2 alert. According to market news, Jiangsu has once again initiated a production shutdown and power rationing plan, implementing a strategy of starting four and stopping two.
Emergency notices of shutdowns have been issued in many places in Xiaoshan, and the situation is very serious.
Cotton prices have soared, some are happy and some are sad?
According to data from relevant agencies, the central reserve of cotton has continued to destock since 2014, dropping from more than 11 million tons to about 1 million tons now. The effect of destocking is significant. In the medium and long term, it will have a positive impact on cotton. The price is bullish. The sharp decrease in cotton reserves is due to the contradiction between more than 10 million tons of seed cotton resources and more than 20 million tons of ginning production capacity. This has led to a resurgence in the domestic new cotton purchase market. Cotton farmers are still reluctant to sell, and the game with ginners continues. Against the background of rising cotton futures prices in Zhengzhou, the purchase price of seed cotton has picked up in the past two days. At present, the price of machine-picked egg roll cotton in Beijiang is generally above 11 yuan/kg, with the highest price reaching 11.2 yuan/kg, and the price of loose cotton is also close to 11 yuan/kg. As the price of seed cotton returns to 11 yuan, cotton farmers’ sales enthusiasm has increased significantly.
Significant fluctuations in the cotton market directly affect enterprises in the textile industry chain. Affected by the surge in cotton prices, the performance of enterprises that hoarded more cotton in the early stage has increased significantly, while some enterprises that hoarded less goods were obviously passive. The “prisoner” effect of ginners is obvious. Many ginners are caught in a contradiction. The price of new cotton is high. If they don’t accept new cotton, they will definitely lose money in the new year. But if they take a gamble, they may still make a fortune. , now the game between the upstream and downstream of new cotton has become the main contradiction in the market. It can be said that some companies are happy and some are worried.
How long can raw materials increase without orders?
According to China Yarn Network, the recent increase in cotton prices is not driven by consumption. In fact, the demand in the textile market is sluggish. Because there are no orders, some downstream companies have closed their doors. Many market players People expressed concern, “Without the support of downstream orders, how long can raw materials rise?” Zheng cotton continues to fluctuate at high levels. The market is bullish and the harvest atmosphere is picking up. It is not ruled out that relevant departments will introduce new policies while increasing cotton supply, in order to Reduce the speculation in the cotton market and prevent the market from being overly optimistic and intermediate links hoarding cotton.
No matter what the cotton market outlook is, the current domestic cotton market has clearly deviated from the fundamentals; after a large amount of new cotton is launched,��, cotton prices will still fluctuate significantly, there are large uncertainties, and market risks are already high. Before a large amount of new cotton comes on the market and the degree of downstream acceptance is not yet clear, it is recommended that companies purchase cautiously and the purchase volume should not be too large.
Institutional View
Fu Bo, senior researcher of agricultural products at Guotai Junan Futures, said that although the US Department of Agriculture lowered the 2021 /China’s cotton demand in 2022, but the market believes that due to the impact of the first-phase trade agreement and the decline in domestic production, China will maintain good demand for US cotton. In addition, the continued rise in energy prices has triggered concerns about winter heating, and cotton demand will benefit in stages. expected. Domestic short-term is still driven by the cost of new cotton. The purchase price of new cotton seed cotton remains above 10 yuan/kg (40 cents, 3.3 yuan/kg cotton seed), and the cost of new cotton is more than 22,000 yuan/ton. Cotton farmers, ginners, The game between yarn mills has intensified and is currently in a stalemate, causing domestic spot prices to remain at high levels and fluctuate. It is expected that domestic and foreign cotton prices will fluctuate at high levels in the short term. Further increases will require new drivers. This week’s low has become short-term support. It is recommended to go long when it falls back to the support.
Guangzhou Futures Xie Ziqi said that although Xinjiang seed cotton acquisitions ushered in a brief cooling-off period of a few days after the National Day due to policy controls such as increased cotton selling and storage, the ginning plant acquisition task target pressure Still exist. From October 13th to 14th, the purchase price of seed cotton in Xinjiang began to rise again. The purchase price of machine-picked cotton in northern Xinjiang is 10.6-10.8 yuan/kg, and the quotation price of ginners in some regions exceeds 11 yuan/kg. The price of machine-picked cotton in southern Xinjiang has remained relatively stable, and the purchase price of hand-picked cotton in some areas has also increased slightly. The purchase price of seed cotton is expected to rise sharply, and factors such as overcapacity in ginneries leading to harvest rush are once again dominating the market. Cotton once again reached its daily limit across the board. The main acquisition period of cotton – that is, maintain a long-term thinking on cotton before late October, but it should be noted that the current high price has put great pressure on downstream textiles, and the industrial chain will most likely be difficult to smoothly transmit this high price. Pay attention to timely and phased profits or part of the Profits are converted into protective puts.
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