Zheng cotton’s trend fluctuates upward
The increase is considerable, the increase is considerable
Recently, the main center of Zheng cotton has gradually moved up from 15,500 yuan to 15,800 yuan. The spot sales progress of ginners has also accelerated, but there is still a large proportion of lint cotton that has not been sold, especially in northern Xinjiang. At the same time, as the center of gravity of Zheng Cotton moves upward, it gradually enters the hedging range of the Northern Xinjiang ginning factory, which will suppress the subsequent growth rate. However, in the medium term, the main contradiction in the operation of cotton prices lies in the pace of replenishment of textile enterprises and the continuity of orders. The current inventory of textile enterprises is low, which provides low support for cotton prices. However, replenishment has ended before the Spring Festival, and there is also suppression from above. Before the Spring Festival, Zheng Mian will not fall too much.
In January 2024, the trend of Zheng cotton fluctuated upwards, with a considerable increase. The main contract price was close to the acquisition cost in southern Xinjiang. The core driver of this round of rising cotton prices is the improvement in downstream demand. Cotton raw material inventories and finished cotton yarn inventories of textile companies have continued to be destocked. Weaving mills are also actively building cotton yarn raw materials, and gray fabric inventories are also reducing at the margin. However, as the Spring Festival approaches and replenishment ends, the downstream bullish factors gradually weaken, and the hot early trading situation gradually turns to dull.
Zheng Cotton main contract market trend
On January 29, the main contract of Zheng cotton was quoted at 16,125 yuan/ton, an increase of 125 yuan/ton from the previous day, officially breaking through the 16,000 mark.
Zheng Mian’s main contract
Officially broke through the 16,000 mark
Last week, Zheng cotton futures entered the futures market with a large amount of capital. The main contract of Zheng cotton 2405 increased its position by more than 40,000 lots. The futures price rose from 15,540 yuan to 15,880-16,100 yuan. The position of Zheng cotton reached 850,000 lots, showing a continuous increase in positions. Trend, but facing the huge pressure of Xinjiang cotton inventory loss of more than 5 million tons and urgent need to sell futures to maintain value. According to data from the China Cotton Information Network on January 16, as of December, the national cotton commercial inventory was 5.53 million tons, an increase of 816,000 tons year-on-year, and an increase of 999,000 tons month-on-month; of which Xinjiang cotton stocks were 4.4149 million tons, an increase of 845,600 tons month-on-month, and a year-on-year increase of 4.4149 million tons. 345,200 tons; as of the end of December, the cotton industrial inventory of textile companies in the warehouse was 886,600 tons, and the cotton inventory at the disposal of textile companies was 1.29 million tons; according to statistics from China Cotton Notary Inspection Data, as of January 11, 2024, there were 1,110 cotton factories in the country The number of notarized inspections by processing enterprises was 5.0809 million tons, a year-on-year increase of 62%, of which Xinjiang cotton was 4.967 million tons, a year-on-year increase of 60.8%; Mainland cotton was 76,000 tons, a year-on-year increase of 100%. The average amount of lint purchased and processed by each ginner was only 4,000- 4,500 tons; as of January 4, China has signed contracts to import 816,300 tons of US cotton this year, accounting for 39.67% of the total contracted exports of US cotton. The above statistics are all higher than the estimated cotton planting area, production volume, and Data such as the extent of production reduction, purchase volume, spot sales, commercial inventory, and industrial inventory confirm the difficulty of production and marketing operations in the entire industry chain of cotton textile enterprises this year.
Judging from a survey of some cotton processing companies in Xinjiang, as of January 25, the sales progress of lint cotton in 2023/24 has generally reached 40-50%, and the sales rate of a few ginners in the three major cotton areas in southern Xinjiang exceeds 60%. It is expected that during the Spring Festival The overall sales progress in Xinjiang will reach 60-70%. Since the average purchase price of seed cotton in northern Xinjiang is slightly higher and the overall cost of lint cotton is 300-500 yuan/ton higher than that in southern Xinjiang, the sales progress of cotton processing enterprises in northern Xinjiang is still slow.
Since late December
Zheng Mian started the rhythm of shock and rebound
A cotton company in Shaya County said that since late December last year, Zheng Cotton has started a rebound rhythm. While accelerating basis price sales, the company has also actively placed orders and quoted prices for spot goods. Currently, the remaining lint cotton inventory is less than 3,300 tons, and the sales progress If it exceeds 65%, loan repayment and cash flow pressures are relatively controllable.
It is understood that in December and January, the main subjects of Xinjiang cotton inquiries and purchases were cotton trading companies. As the main contract of Zheng cotton exceeded 16,000 yuan/ton, the hedging ratio has been increased to 70-80%. Mainland textile enterprises above designated size focus on procurement of XPCC cotton and resources from large-scale processing enterprises (groups), which are mainly shipped by railway from December to March.
Several cotton trading companies in Shandong, Henan, Jiangsu and other places said that the number of cotton companies/middlemen inspecting goods and placing orders this week has been significantly reduced compared with mid-January, because a large proportion of small and medium-sized cotton textile mills have entered the pre-holiday holiday. status, raw material inquiries and purchases have gradually stopped (including port bonded cotton, cargo, etc.). Some cotton companies have also begun to reduce pending orders and quotations, waiting for the market to start after the year.
Enterprises should replenish their inventory appropriately before the holidays
To reduce the risk in mid-to-late February
At present, the sales of cotton yarn, gray fabrics, etc. are still significantly better than that of cotton. In addition to the end customers’ concerns that the yarn mills will not be able to deliver goods in time due to the early holiday, they are also in line with the industry’s general judgment that the pre-holiday cotton yarn period will be low.��The rising momentum will most likely be passed on to the spot cotton yarn after the holiday. Therefore, companies should restock stocks appropriately before the holiday to reduce risks in mid-to-late February.
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