According to feedback from some cotton processing enterprises and traders in Xinjiang, due to the fact that the Zheng Cotton CF205 contract continues to consolidate at 15,500-16,000 yuan/ton (the fluctuation range is significantly narrower than the previous period), the panic among cotton textile mills and downstream consumer terminals has eased. ), the relatively good order situation in March/April/May and the relatively high profits of cotton yarn, polyester-cotton yarn, etc., cotton companies have been more active in inquiry and replenishment in the past week, and the transactions at point prices and fixed prices are higher than those in late February. There was a relatively obvious rebound, but basis sales were tepid and the performance was somewhat deserted.
The recent cotton market has shown the following three characteristics: First, a large number of low-priced orders from hedging traders and futures companies have suppressed the price of Xinjiang cotton spot sales market. Mainland textile companies and middlemen also mainly purchase from Traders purchase goods based on price rather than directly from ginners; secondly, the price difference between high-quality and low-quality Xinjiang cotton is relatively large, especially the price of late-stage cotton containing light stains and yellow-dyed cotton is relatively low. Cotton merchants and companies spinning low-count yarns have a strong momentum of reducing grades and prices; thirdly, road and railway cotton transportation have made great efforts from January to March, and the price difference between cotton prices inside and outside Xinjiang has dropped from 600-700 yuan/ton in the early period to 300-400 yuan/ton.
According to statistics, as of March 16, there were 17,486 Zheng cotton warehouse receipts (-81) and 3,389 effective forecasts, which were down 51.05% and 25.73% respectively compared with the same period in 2019/20. The proportion of effective forecast declines was More than 60% dropped to about 25%, indicating that when the Zheng cotton CF2105 contract fell below 16,000 yuan/ton and 15,500 yuan/ton, Xinjiang cotton processing enterprises and traders were less willing to apply for warehousing, register warehouse receipts, and hedging. There was a significant rebound in January and February.
Judging from the survey, the financial pressure on some Xinjiang cotton companies will gradually increase from March to May, and the enthusiasm for selling cotton will decrease. On the one hand, the Agricultural Development Bank of China and others must be returned in proportion before the end of May. Commercial bank loans pave the way for applying for credit funds in 2021/22; on the other hand, from a time perspective, the ginning mill equipment update, renovation and factory and workshop maintenance will also be carried out in May and June, and cash flow demand will increase; Furthermore, from a time perspective, it will take a long time to recover the payment for Zheng cotton’s May contract delivery, which is not conducive to the timely return of credit funds and pledged financing. Therefore, arbitrage operations or direct spot sales are the main ones. It is expected that Xinjiang cotton will be exported after May. Mainland road shipments will gradually weaken and cool down. </p
