According to statistics from SunSirs, as of October 13, the average spot market price of lint in China was RMB 13,851/ton, an increase of RMB 938/ton or 7.26% from October 1; an increase of 9.56% year-on-year. ICE cotton rose sharply in early October. On the one hand, the prices of international agricultural products have generally risen and cotton is riding the wind; on the other hand, the hurricane weather in the United States has dragged down the picking of new cotton; of course, there are also factors such as the continued loose monetary policy of the Federal Reserve to boost market confidence.
Hurricane Delta landed in the American Delta, and the rain brought by the hurricane posed a huge threat to the quality and yield of American cotton. During the double festival period, ICE cotton futures continued to rise. As of October 13, the main contract was reported at 68.37 cents/lb, and the previous test was 70 cents/lb. However, from the perspective of the recent rise and fall of cotton in the recent period, upward pressure still exists, and it may tend to consolidate at a high level in the short term.
U.S. cotton production is expected to be reduced, and the supply and demand side is basically unchanged. The U.S. Department of Agriculture released its October global production and demand forecast, showing that U.S. cotton production in 2020/21 will be reduced by 1% from the previous month to 17.9 million bales. There were no changes in US domestic consumption, exports, and ending stocks. The US ending inventory is still at 7.2 million bales, and the inventory-to-consumption ratio is 42%, which is higher than 41% last month.
The global cotton stocks at the end of the period have adjusted prices, and consumption has increased. In 2020/21, global cotton production will decrease, consumption and imports will increase, and ending stocks will fall. Global production has been reduced by 900,000 bales, with the reduction mainly coming from Mali, Pakistan and Greece. Global consumption increased by 1.5 million bales from the previous month, and the increase was mainly from China and India. The global ending inventory was reduced by 2.7 million packages from the previous month to 101.1 million packages, and the inventory consumption ratio was 89%.
The main domestic Zhengzhou cotton hit the daily limit, and the spot price rose 4.5% on two days. After the return of the double festivals, the domestic Zhengzhou cotton quietly chased the international cotton price, and the increase was more than 2% for three consecutive days. The biggest increase was on October 12, when the increase was 5.28% on that day, and the daily limit was reached. Judging from the current chart, in late September, the cotton futures basically fluctuated sideways, but entering October, cotton prices have skyrocketed. On the one hand, international cotton prices are rising, and domestic Zhengzhou cotton is catching up; on the other hand, the short-term daily limit of staple fiber on the first day of listing has a certain supporting effect on textile fiber raw materials. Both cotton and viscose staple fiber rose significantly. As of October 13, 1.2D*38mm viscose staple fiber reported 9,680 yuan/ton, an increase of 5.68% from October 1.
As of October 13, 32S ring-spun cotton yarn in Shandong area reported 20,025 yuan/ton, an increase of 375 yuan/ton, or 1.91%, and a month-on-month decrease of 8.65% compared to October 1. Due to the return of the double festival, the price of cotton has risen by nearly 1,000 yuan/ton, and the price of raw materials has soared. Although cotton yarn manufacturers have quotations, they need to separately draw up prices before placing orders. How many manufacturers implement short-term quotations that are valid on the same day, and overnight quotations are invalid. On the one hand, this is a promotional tool for manufacturers, and on the other hand, the recent single-day fluctuations in cotton prices are indeed too large, and the risk of fluctuations in cotton costs increases. Textile enterprises seize the opportunity of rising raw materials to strive for the expansion of profit margins.
SunSirs analysts believe that the U.S. postponed sanctions on Xinjiang cotton in late September. The impact of the hurricane on the quality of U.S. cotton has caused the cotton market to be bullish. At the same time, downstream orders have increased, textile enterprises’ consumption has improved, and cotton prices have been transmitted upwards. Smooth. However, from the data point of view, the global cotton stocks at the end of the period are still at a high level. Except for China and India, cotton consumption has generally recovered. On October 13, Zheng Cotton's main force broke through the 14,000 yuan/ton mark. The trade environment was uncertain and the market cautiously chased the increase. It is expected that the short-term high consolidation will be the mainstay. The spot market will continue to rise and the rise will slow down.
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