Last week (January 17-21), the domestic cotton market remained deserted. As spot prices were still lower than cotton companies expected, sales activities basically stagnated. Downstream textile companies are taking holidays one after another, but only some companies are still insisting on starting production, and the demand for raw material replenishment is weak.
Last week, the purchasing and selling activities of raw materials were deserted, and the price of Zheng cotton maintained a narrow range. In the absence of clear guidance from the spot market, futures prices continue to fluctuate at high levels, but the volatility has significantly weakened. The main contract of Zheng Cotton has always fluctuated around 21,600 yuan/ton. Under the strong price sales of cotton companies, cotton prices have remained stable at high levels, and the futures price range has strong support above 20,000, making it difficult to see a sharp correction for the time being.
Last week, as the market was deserted, new cotton sales lagged behind the same period last year. According to data from the National Cotton Market Monitoring System, as of January 20, the national sales rate was 28.8%, a year-on-year decrease of 27.2 percentage points, of which Xinjiang sales were 26.5%, a year-on-year decrease of 27.9 percentage points. Based on the estimated domestic cotton output of 5.801 million tons, as of January 20, the cumulative sales of lint cotton nationwide were 1.657 million tons, a year-on-year decrease of 1.645 million tons, of which Xinjiang sales were 1.397 million tons, a year-on-year decrease of 1.463 million tons. From the above data, it can be seen that due to the high price, the sales progress of new cotton has lagged behind significantly.
Last week, downstream textile companies successively arranged holidays earlier than in previous years, and working hours after the Spring Festival were basically the same as last year. It is understood that cotton prices remain strong before the holiday. If new cotton spinning yarn is purchased, spinning companies are basically at a loss. In order to control risks, companies with limited stocks of low-price raw materials reduce new spinning orders. As the cotton spinning industry has entered a state of suspension of production and holidays, companies are most concerned about the trend of cotton prices after the holidays and whether cotton yarn prices can continue to rise to make up for the lack of spinning profits.
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