Price trend

There had been no significant change in the cotton industry chain this week, with continuous increase in upstream supply and no significant improvement in downstream demand. Both domestic and international cotton prices were showing a weaker trend. According to the Commodity Market Analysis System of SunSirs, as of November 4th, the spot price of 3128B grade cotton was 15,382 RMB/ton, with a weekly decline of 0.5%.

Analysis review

Domestic market: According to survey data from the National Cotton Market Monitoring System, as of October 31, 2024, the progress of new cotton picked in China was 85.2%, an increase of 8.5% year-on-year; The national sales rate was 87.0%, an increase of 20.8% year-on-year; As of October 31st, the national processing rate was 39.4%, a year-on-year decrease of 10.5%. As of October 31st, the operating rate of cotton mills nationwide was 97.93%, with a slight decrease of 0.22% on a weekly basis. The operating rate of Xinjiang cotton ginning plants continued to remain high. As of December 4th, the acquisition work in the northern Xinjiang region was basically completed, while the southern Xinjiang region was still in the middle and late stages. With the continuous increase in the number of new cotton listings, the pressure on the supply side had increased.

International market: Last week, ICE US cotton briefly fell below the 70 cent mark, but rebounded slightly last Friday, closing at 70.17 cents/pound, a weekly drop of 0.49 cents/pound, or 0.7%. Although the signing and shipment of US cotton exports continued to recover last week, the fundamentals were not favorable, and external macro risk factors increased, resulting in a weak trend in the US cotton market.

Downstream demand: As of October 31st, the operating load of mainstream textile enterprises was 72.5%, a month on month decrease of 0.68%. The yarn inventory of major regional textile enterprises was 23.9 days, with a month on month decrease of 5.91%. As the traditional peak season comes to an end, downstream market orders continued to decrease, and textile companies had reported a weak trend in new orders. There was also a decreasing trend in orders for medium and low count yarns in some areas. The start-up of small and medium-sized enterprises had significantly decreased, and downstream fabric factories were purchasing according to demand.

Market outlook

As of December 4th, the market had basically completed the favorable macro level. From the perspective of the industry, the sale of seed cotton was nearing its end, and the acquisition cost below was gradually solidifying as support. During the peak period of new cotton acquisition, the purchase price of seed cotton was gradually solidifying, and the downward space for cotton prices was limited. It is expected that the market will continue to fluctuate within a certain range in the short term.

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