Exclusive news from China Cotton Network: Since the cotton reserves were rotated out in July, all parties in the market have actively participated in the auctions. As of now, reserve cotton continues to maintain a 100% daily transaction rate, and the market’s enthusiasm for buying is self-evident. With the increase in the inflow of cotton reserves into the market and the issuance of sliding tax quotas, the space currently left for textile companies to purchase raw materials has gradually expanded, and some companies have shown signs of significant increase in raw material inventories.
The purchasing space of textile companies has expanded, one of which is the variety of purchases. Currently, the mainstream spot products on sale in the market include 2020/21 Xinjiang cotton, real estate cotton, 2019/20 and 2020/21 US cotton, Brazilian cotton, Indian cotton, and 2013/14 reserve cotton. According to the grade of yarn produced by textile enterprises, enterprises producing combed compact high-count yarn mainly choose U.S. cotton, high-grade Xinjiang cotton, and long-staple cotton, while medium-count yarn enterprises purchase Xinjiang cotton, some U.S. cotton, Brazilian cotton is used for matching, and Indian cotton, real estate cotton and low-grade Xinjiang cotton are selected for low-grade yarns. From the perspective of the product demand of the entire downstream textile enterprises, the current supply structure of the raw material market has become more complete. Not only has the demand for low-grade cotton in open-end spinning been supplemented to a certain extent, but also after the issuance of sliding tax quotas, the customs clearance of high-grade imported cotton has increased, which has also eased the The situation of shortage of high-quality cotton has been solved.
Textile enterprises have expanded purchasing space, and another obvious manifestation is the expansion of raw material price distribution range. Cotton futures rose sharply in July, with a large number of basis points covered by spot goods. Downstream enthusiasm for taking orders has declined, and middlemen have obviously lacked motivation to ship goods. With the recent fall in the price of Zheng cotton futures, the market buying and selling window has been opened, the number of textile enterprises pricing has rebounded, and the transaction volume has also increased. As many industry players have expectations for the market outlook, some textile companies have appropriately increased their stocking space in order to reasonably reduce future cost investment. In addition, due to the approaching delivery of the Zheng Cotton 09 contract and the arrival of new cotton on the market, the gap in the supply-side pricing range has expanded, and low-price reserve cotton has flooded the circle of friends, which has increased the space for downstream companies to choose the best.
The Golden Nine and Silver Ten textile peak seasons are approaching, and the domestic epidemic control is effective and the foreign epidemic situation is severe. Whether last year’s phenomenon of a large number of foreign trade orders returning to the country will happen again is worthy of continued attention. At present, textile companies have expanded their choice of raw materials, or it is an excellent time to stock up.
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