The launch of new flowers in 2022 is approaching, and the price and market trend of seed cotton have become the focus of the current market. The author has sorted out and analyzed several reasons that may affect the price trend.
Seed cotton cost factors. The cost of cotton planting this year is generally higher than last year. When renting land, the cost is about 3,000 yuan/mu. Based on an average output of 400 kilograms per mu, the unit price of seed cotton is 7.5 yuan/kg to reach the balance point. Assume that the average unit price of cotton seed is 2.5 yuan/mu. Under the condition of kilogram, the cost price of lint will also reach about 16,800 yuan/ton. Cotton purchasing and processing companies generally suffered losses last year. In the absence of significant improvement in downstream demand, processing companies will not rush to harvest this year. Therefore, for cotton growers this year, they should sell according to market trends and not have too high expectations. At least the target price subsidy will still provide some protection to growers. Processing companies need to strictly control quality and not bet on the future market. They should always adjust to changes in downstream sales. Flexibly adjust business strategies.
The price difference between domestic and foreign cotton and supply-side factors. Affected by the “Xinjiang-related Act”, Xinjiang cotton was separated from the international market, causing the price difference between domestic and foreign cotton to be around 5,000 yuan/ton. The arrival of new flowers is imminent, and the cotton inventory of last year is still high, resulting in a domestic cotton oversupply situation.
demand and factors affecting the epidemic. The epidemic has brought about major changes in people’s consumption habits. Food and lifestyle consumption has increased, while in contrast, non-rigid consumption such as travel and clothing has declined. When demand is difficult to change, textile companies will produce according to orders and buy raw materials as they are used. Cotton companies can only hedging or choose to deposit funds to meet the need for quick withdrawal of funds. It is difficult for cotton prices to rise under the pressure of real supply.
To sum up, the open-scale price of Xinjiang seed cotton in the new year is expected to drop significantly compared with the previous year. Judging from the survey, the industry predicts that the purchase price of seed cotton will be mostly 5.5-6.5 yuan/kg, which is equivalent to lint price of 13,000-14,500 yuan/ton. At present, the most important variables affecting future price trends are whether the consumer side can improve and the emergence of important factors affecting the cotton market at home and abroad.