1. Price quotes
On November 1, the price of 3128B lint was around 22,532 yuan/ton, and on the 30th, the price was around 22,640 yuan/ton, an increase of 135 yuan/ton from the end of the previous month, an increase of 0.60%, and a year-on-year increase of 54.50%.
2. Market analysis
Cotton showed a trend of rising in the first half of the month and falling in the second half of the month. At the beginning of the month, the purchase price of new cotton was supported, the cotton price fluctuated at a high level, and the domestic cotton supply was abundant. New cotton began to go public on a large scale. The purchase market price dropped compared with that in October. At the same time, the calculation method of the reserve cotton sales price of the real estate cotton has been adjusted and optimized. The price of the reserve real estate cotton has fallen, and the transaction price of the reserve Xinjiang cotton has remained stable. On the 10th, the second batch of 600,000 tons of central reserve cotton was released.
In the middle of this month, Xinjiang’s cotton harvesting work is nearing completion. The market expects that Xinjiang’s cotton production this year will be lower than last year. The cotton spot supply will enter a loose state, and prices will remain firm. Downstream textile companies are not enthusiastic about purchasing, and high-priced new cotton shows signs of inquiries. , But the textile enterprises have insufficient orders, and the overall market atmosphere is relatively weak. Downstream yarn grey fabric companies have accumulated inventory, and production and operation pressures have increased, and textile companies still mainly purchase and reserve cotton.
By the end of the month, the harvest of seed cotton has basically come to an end, the processing of new cotton has accelerated, and sales have been sluggish. According to data from the National Cotton Market Monitoring System, as of the week of November 26, 2021, 453,000 tons of lint were processed nationwide, a decrease of 10.3% from the previous month, and 129,000 tons of lint was sold, a decrease of 7.9% from the previous month. The purchase of raw materials by downstream textile companies mainly focuses on bidding for reserve cotton, and new cotton transactions are scarce. Terminal demand did not improve, processing companies began to cut prices, market transactions were tepid, and the cotton market fluctuated.
In November, a total of 475,700 tons of reserve cotton was put on the market, with a total transaction of 325,700 tons, an increase of 79,100 tons from the previous month, and a transaction rate of 68%. The average transaction price was 19067 yuan/ton, an increase of 318 yuan/ton from the previous month, and a discount of 3128 yuan to 20,565 yuan/ton, an increase of 53 yuan/ton from the previous month.
In terms of futures, the Zheng cotton market fluctuated downward. The main contract settlement price on the 1st was 21570 yuan/ton, and the settlement price on the 30th was 20565 yuan/ton, down 1005 yuan/ton from the previous month. At the end of the month, the new mutant strain in South Africa caused market concerns. Crude oil fell sharply, panic spread on the disk, and cotton and cotton yarn futures prices fell.
Internationally, the emergence of a new mutant virus in South Africa has triggered global panic. U.S. cotton has plummeted due to this drag. ICE cotton plummeted by 400 points on the same day. The overseas epidemic has repeatedly worried the market. The international cotton market has weakened due to the impact of consumers. 30 Japanese ICE futures limit lower. The March contract closed at 106.41 cents on the 30th, down 8.62 cents from the beginning of the month. The USDA monthly supply and demand report in November showed that the global 21/22 cotton production increased by 329,000 tons from the previous month to 26.517 million tons, an increase of 2.09 million tons (8%) from the previous year. According to data from the Cotton Association of India, the number of new cotton marketed in India in October was 530,000 tons, a year-on-year increase of 15%. The harvest of new cotton in Pakistan has been completed, and the processing quantity is significantly higher than the previous year's level.
3. Downstream industry chain
The cotton yarn market continued to decline in November. On the 30th, the price of 32S cotton yarn was 30,533 yuan, down 3.38% from the previous month. The raw material inventory of downstream textile enterprises was about one month, and the operating rate was flat or slightly decreased. As of November 26, the yarn inventory of textile enterprises in major regions of the country was 20.5 days, an increase of 0.9 days from last week, an increase of 5.67% compared with the same period last year. An increase of 28.13%. Downstream market transactions are weak, orders for conventional products are average, shipments are slow, and there is no good performance on the demand side for the time being. The inventory of cotton yarn enterprises has gradually increased, and the demand for orders has not improved significantly. The phenomenon of accumulated inventory of finished products has caused the spinning mills to be cautious in purchasing cotton.
The cotton grey cloth market maintains a weak transaction, and the impact of textile companies' limited electricity is gradually reduced, and the start of construction has gradually returned to normal. The recent increase in electricity bills in some areas has affected product profits. Upstream procurement costs remain high, and downstream orders are small, mostly in small batches and short-term orders. The resistance of cotton prices to downstream is greater. According to relevant statistics, the retail sales of apparel and textiles in October was 122.72 billion yuan, an increase of 15.46% month-on-month and a year-on-year decrease of 3.3%. This data has fallen for three consecutive months.
The textile industry is gradually entering the off-season. Under the dual pressures of weaker end-apparel and grey cloth market consumption and high raw material costs, demand is unsustainable. It is expected that the short-term cotton market will fluctuate downward.
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