1. Price line
After the May Day holiday, the cotton spot market rose. On the 7th, the price of 3128B lint was around 16,160 yuan/ton. It was up 5.01% month-on-month and 41.75% year-on-year.
2. Analysis
China: After the May Day holiday, the cotton spot showed an upward trend. On the 7th, China's cotton price index 3128B broke the 16,000 mark, which was 16,154 yuan/ton, an increase of 282 yuan/ton from last Friday. Recently, the cotton market has been affected for a long time, and the market response after the holiday has been relatively large. The news of the additional issuance of quotas came to fruition on the evening of April 30. This time, the amount of cotton import sliding tax quotas is 700,000 tons, all of which are non-state trade quotas. The additional issuance of quotas will increase the circulation of imported cotton in the market. However, there have been rumors in the market that the additional issuance of quotas and the quantity is around 2 million tons. This news once suppressed the disk, and the actual additional issuance is lower than expected, which is beneficial to textiles and clothing. Foreign trade companies receive orders, reduce raw material procurement costs, and improve product competitiveness.
The "Statement on the Indefinite Suspension of All Activities under the China-Australia Strategic Economic Dialogue Mechanism" issued by the National Development and Reform Commission, from now on, will indefinitely suspend all activities under the China-Australia Strategic Economic Dialogue Mechanism jointly led by the National Development and Reform Commission and relevant departments of the Australian Federal Government. activity. According to USDA export forecast data, Australia's exports for the three consecutive years from 2018 to 2020 are 791,000 tons, 296,000 tons and 305,000 tons respectively. In the first two years, China imported 380,000 tons of Australian cotton and 157,000 tons, respectively. With the cooling of economic and trade activities between the two countries in the past two years, Chinese buyers' interest in Australian cotton has gradually declined. The latest data shows that from September 2020 to February 2021, China has imported only 37,000 tons of Australian cotton (half a year). Under the premise of such a small amount of imports, the economic and trade activities of the two countries continue to cool, and the impact on the domestic cotton market is very limited.
International: The export sales report released by the United States Department of Agriculture (USDA) on Thursday showed that in the week ended April 29, the US 2020/2021 year's export sales of upland cotton increased by 63,600 bales, down 17% from the previous week and compared with the previous four weeks. The mean is reduced by 56%. That week, the net sales of upland cotton exports from the United States in 2021/2022 were 61,200 bales. US upland cotton exports shipped 456,600 bales, an increase of 34% from the previous week and an increase of 35% from the average of the previous four weeks. Among them, 155,000 packages were shipped to mainland China. U.S. cotton shipments hit a new annual high and scarce rains in Texas stimulated a sharp rise in ICE cotton futures.
The epidemic situation in India continues to ferment, which is good for the short term and has long-term concerns. In the early stage, the textile industry focused on the issue of the return of orders from India. According to market feedback, a small number of orders have indeed returned. However, in the long term, its worries about global economic recovery cannot be ignored.
Futures: Zhengzhou cotton and cotton yarn rose synchronously this week. On May 7, the settlement price of Zhengzhou cotton's main contract 2109 was 16,035 yuan/ton, an increase of 475 yuan/ton from last Friday. On May 7, the settlement price of the main cotton yarn 2109 contract was 23,725 yuan/ton, an increase of 430 yuan/ton from last Friday.
3. Downstream industry chain
During the holiday season, the pure cotton yarn market continued to improve. Downstream yarn companies will have better purchasing intentions and purchases of raw materials in May than in April. In addition, yarn companies will generally perform well in terms of their own orders, prices, and profits. According to data from the National Bureau of Statistics, in the first quarter, the operating income of industrial enterprises above designated size in the textile industry increased by 27.3% year-on-year, and the total profit increased by 40.4% year-on-year; the national yarn output was 6.36 million tons, an increase of 32% year-on-year; the cloth output was 8.29 billion meters, an increase of 12.5% year-on-year.
Cotton prices have risen, and inquiries for purchases in the spot market are relatively quiet, mostly for traders. The cotton market coexists with both negatives and positives, and the future market is expected to be stable and strong.
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