Recently, the quantity and price of reserve cotton have dropped. From the beginning of reserve cotton to the 17th, the transaction rate dropped to 67.4%, and the average price dropped to 14,726 yuan/ton. Although there was a slight rebound yesterday, the actual transaction rate was still Less than 80%, which has a negative impact on the market. Through understanding some market entities, the editor found that everyone has different reactions:
Trader: Will we lose money if we buy reserve cotton at high prices?
For traders, the purpose of bidding for reserved cotton is to earn price differences from future trade. There are also some traders who help other market entities to auction on their behalf and earn some handling fees from it. However, this year traders feel “a lot of pressure”.
Since the reserve cotton was released on the 6th, the average price fell by 750 yuan/ton as of the 16th. On the 16th, a Hebei trader said: “In the early stage, more than 1,100 tons of reserve cotton were auctioned. Now, the average loss is 390 yuan/ton. The more we auctioned in the early stage, the more severe the losses. I originally thought that this year’s auction would be the same as last year, with higher prices.” The higher the auction price. Unexpectedly, it will be the opposite this year. I am afraid I will lose money this year.” It is understood that many traders feel that the previous auction and storage was a bit “excessive”, and they generally have plans to “stop” these days.
Textile companies: Looking forward to stability after cotton prices drop
A textile company boss said that the level of cotton prices is not the most important thing. The most important thing is that cotton prices should be stable. Nowadays, the transaction price of reserved cotton is lower, which will do more harm than good in the short term to textile enterprises. On the 16th, a Shandong textile company boss said: “We don’t dare to auction large quantities of stock. We are worried that if we just bought it at a high price today, the price will fall again tomorrow.” Now that the average transaction price of reserve cotton is lower, textile mills can only Wait and see.
From a long-term perspective, lower cotton prices will do more good than harm to domestic textile companies. At present, the price inversion of domestic and foreign yarns is obvious. As of the 16th, the RMB price difference between conventional Indian yarn and domestic yarn at Qingdao Port, Zhangjiagang and other ports reached 1,200 yuan/ton, and the competitiveness of domestic yarn is increasing. If domestic cotton prices continue to fall, the price advantage of domestic yarn will be significantly improved.
Therefore, many textile companies said that they are very welcome to the lower price of reserve cotton, but the price must stabilize as soon as possible before everyone can start purchasing.
Cotton farmer: I will grow cotton if the price rises
Some cotton farmers in the Yellow River Basin are already preparing for sowing. It is understood that the enthusiasm of cotton farmers this year is slightly higher than last year, but there are still some cotton farmers who are still waiting and watching.
“I only care about the price. If the price of seed cotton is high, I will definitely grow it.” A major cotton grower said that the current transaction price of reserved cotton affects the overall domestic market, so cotton farmers are bound to pay attention to reserved cotton. Many cotton farmers said: “If the average price of cotton reserves falls below 15,000 yuan/ton, it may have some negative impact on this year’s spring sowing, and the growth in cotton planting area may come to nothing.”
Most believe that we must look through the phenomenon to see the essence. The recent slight decline in cotton does not affect the overall situation. The upward shift in the center of gravity of cotton prices is a trend. Here’s why:
First, the affordability of textile enterprises.
China Textile has gradually emerged from the quagmire since 2016 and has made a small profit. Since the Spring Festival in 2017, most textile companies have been operating at full capacity and their production is vibrant. Due to the influence of cost factors, the price of outer yarn and inner yarn has dropped to 900-1,200 yuan/ton. The competitiveness of domestic yarn has improved. Therefore, there is a certain foundation for digesting high cotton prices.
Second, domestic cotton prices are currently in a low range.
It is understood that although the current cotton price of 16,000 yuan/ton is nearly 3,000 yuan/ton higher than the price in 2015/16, it is still far behind this year’s target price (18,600 yuan/ton). In particular, the domestic cotton planting area has decreased. Because of low returns, many cotton farmers have abandoned planting. Only by increasing the price of seed cotton can cotton farmers be attracted to continue planting cotton.
Third, the shortage of high-quality cotton is prominent.
The editor communicated with some manufacturers. Everyone generally feels that the quantity of high-quality cotton is small this year, especially the reserve cotton that is rotated out is old cotton from 2011 to 2013. It is not a big problem to make products with yarn count of 40S and below. If spinning high-count yarn, it must be matched with high-quality cotton. cotton.
</p
