After the Mid-Autumn Festival and the National Day, most commodities jumped high, and cotton was no exception. However, after four consecutive rises, it seems that some friends cannot understand why cotton, which has been fluctuating sideways and is unknown to the public, can suddenly break out in such a big market?
There are no major changes on the supply side, with production slightly reduced and stable.
Overseas, the United States The Ministry of Agriculture released a global production demand forecast for October showing that U.S. cotton production in 2020/21 will be reduced by 1% from the previous month to 17.9 million bales. U.S. domestic consumption, exports and ending stocks have remained unchanged for the time being. The ending inventory in the United States is still 7.2 million packages, and the inventory-to-consumption ratio is 42%, higher than 41% last month. Globally, global cotton production in 2020/21 is reduced, consumption and imports are increased, and ending stocks decline. Global production is reduced by 900,000 bales, with the decrease mainly coming from Mali, Pakistan and Greece. Global consumption increased by 1.5 million packages month-on-month, with the growth mainly coming from China and India. Global ending stocks decreased by 2.7 million packages month-on-month to 101.1 million packages, and the inventory-to-consumption ratio was 89%. Overall, the slight decrease in output has not changed much. The month-on-month increase in consumption is also due to the slow recovery of the economy and the increase based on previous reductions.
Domestically, we learned from the Agricultural Machinery Bureau of the Autonomous Region that the cotton planting area in Xinjiang in 2020 is basically the same as in 2019. The cotton planting area in the region (excluding the Corps) is 24.1966 million acres, of which the area under the machine-picked cotton planting model is 16.8963 million acres, accounting for 69.83% of the total cotton planting area. This year’s cotton growth in Xinjiang is generally good. As of October 8, 1.91 million acres of cotton have been harvested, of which 1.61 million acres have been harvested by machines. Since late September, cotton has spun out in the main producing areas of Xinjiang and entered the harvesting period. Some cotton areas such as Aksu Region, Bayingolin Mongolian Autonomous Prefecture, and Bortala Mongolian Autonomous Prefecture have taken the lead in mechanized harvesting. The remaining prefectures are expected to start harvesting in October. The peak period of large-scale harvesting begins in the middle of the year. Data shows that more than 90% of cotton fields in northern Xinjiang have been fully mechanized, and the mechanization rate of cotton harvesting in southern Xinjiang is about 40%.
New cotton is harvested quickly, and the rising cost is the core reason for the market increase
According to a survey of ginning companies and cotton farmers in Xinjiang, recent machine-picked cotton and hand-picked cotton have increased The average price has exceeded 6.5 yuan/kg and 7.5 yuan/kg. Some ginning companies even raised and updated their purchase prices three times a day. As the price of seed cotton rises, the cost of lint continues to rise. According to rough estimates, the current cost of machine-picked cotton in Xinjiang is already 14,200-14,700 yuan/ton, and the cost for outsourced production companies is even higher. Cotton enterprises in Xinjiang are rushing to harvest in full swing, and there are many more cotton traders purchasing cross-region than last year. The machine-picked cotton in northern Xinjiang still maintains a fast picking and harvesting rhythm. It is expected that the remaining amount will be less than 10% by the end of this month. The price of new cotton has continued to rise, forcing the cost of lint to rise.
In terms of cost, cottonseed accounts for about 50% of seed cotton. The sales price of cottonseed also affects the price of lint. From September to early October last year, cottonseed in Northern Xinjiang was 2 yuan/kg. This year, cottonseed is 2.2-2.3 yuan/kg. . The price of 40% of the machine-picked cotton purchased by Beijiang in the early stage is 5.7 yuan/kg, and the cotton seed price is 2.15 yuan/kg. The processing fee is calculated as 1,000 yuan/ton. The cost of machine-picked cotton is more than 13,200 yuan/ton. Taking into account the short-distance transportation costs And warehouse fees and contracting fees, etc., the cost reaches more than 13,800 yuan/ton. After October, the purchase price of machine-picked cotton rose to 6 yuan/kg, or even 7 yuan/kg, and the cost was about 14,000-14,500 yuan/ton. The cotton 2101 contract on the market was at a level near 12,800 yuan before the holiday. The discount on the market of more than 1,000 points is the main reason for the rise in cotton.
The inventory of downstream textile enterprises is low, and the market outlook continues to be optimistic
The quotations of spinning manufacturers in various places have generally increased during the National Day, especially the quotations of cotton yarn and rayon yarn. The increase is obvious. Many people cannot see clearly the sudden rise in the market. Rising quotations for upstream raw materials will further boost the yarn market, and market stockings for Double Eleven and Double Twelve will lead to an increase in market sales. It is worth noting that due to the impact of this year’s epidemic, most textile companies suffered serious losses. In the first half of the year, whether it was yarn mills, weaving mills, or merchants, whether they had a lot of goods or not, production cuts continued, and subsequent increases will increase the sentiment of stocking up and betting on increases.
To sum up, there are two other points worth noting. One is that La Niña may cause a colder winter this year, and clothing consumption is expected to increase. The other is that the M2 growth rate in September was 10.9%. 10.5% higher than the previous value. Increased investment in the currency market is also the main reason for the rise in the entire commodity market and stock market. </p
