After Xinjiang cotton came on the market in 2020, there was a large-scale rush to harvest, which in turn pushed the market price all the way up. This year, Xinjiang’s ginning capacity continues to increase, but new cotton production is expected to decline. The contradiction between more monks and less rice may intensify, and the rush to harvest new cotton is gradually Become market consensus. In this context, the open scale price of Xinjiang seed cotton and the cost of lint processing have become the focus of the industry.
1. Bullish expectations have strengthened, and the opening scale price may increase by more than 2.6 yuan/kg year-on-year
July So far, cotton futures spot prices have risen rapidly, and market participants have strong expectations for a bullish market outlook. With just over a month left before new cotton is launched, Zhuochuang Information conducted a large-scale sample survey on the estimated price of new cotton (machine-picked seed cotton) at the scale. The survey group was local cotton farmers and ginning companies in Xinjiang.
Judging from the distribution of survey results, cotton farmers and ginning companies generally have higher expectations for the opening price of seed cotton this year. ; It is generally believed that the open-scale price of machine-picked cotton in Xinjiang is above 7.0 yuan/kg. Among them, 46% believe that the open-scale price is 7.6-8.0 yuan/kg, followed by 8.1-8.5 yuan/kg and 7.0-7.5 yuan/kg. The proportions are 31% and 14% respectively.
According to Zhuochuang Information’s open-scale price monitoring in the past two years and the open-scale price survey in the new year, it is expected that the open-scale price of machine-picked seed cotton in Xinjiang in the new year may increase by 2.6 yuan/kg year-on-year. above. Based on the research and its own assessment of the market situation, Zhuochuang Information predicts that the opening price of machine-picked seed cotton in Xinjiang this year may be 7.6-7.8 yuan/kg, and the opening time may be concentrated between September 28th and October 1st.
2. Supported by multiple factors, the rush to harvest seed cotton this year will be intensified
With Xinjiang machine procurement Taking cotton as an example, seed cotton prices in 2019/20 and 2020/21 generally showed a trend of first rising and then falling, but their operating market backgrounds are quite different. Although Xinjiang seed cotton is available for sale throughout the fourth quarter, its concentrated delivery period is concentrated from September 25 to November 10 (the completed sales volume at this stage accounts for 70%-80% of the output), so it is mainly at this stage as an analysis time node.
Many factors exist to support the recurrence of the rush to harvest Xinjiang seed cotton this year. The analysis of Zhuochuang Information is as follows:
1. Ginning production capacity will continue to increase, which may intensify the rush to grab cotton.
It can be seen from the price trend of seed cotton in the past two years that the increase in ginning production lines has led to a shortage of raw materials for production companies and has played a more obvious role in driving up the price of seed cotton. According to research by Zhuochuang Information, due to overcapacity, new production lines will no longer be approved starting this year. However, the production capacity that was delayed last year will be released this year, and is scattered in the northern and southern Xinjiang regions.
2. Xinjiang’s cotton area and yield expectations have been significantly reduced this year.
According to a survey by Zhuochuang Information in early June, the cotton sown area in Xinjiang will decrease by 3%-5% year-on-year in 2021, approximately 33.06 million-33.76 million acres. The frequent occurrence of extreme weather during the sowing period in Xinjiang has caused the growth of most cotton to be slow, which will also have an impact on yields. Looking at the upstream ginning market, the production capacity of enterprises has increased and the output of seed cotton has tightened, which may intensify the rush for cotton by ginning enterprises this year.
3. Cotton’s future consumer expectations are good.
According to the current situation, the global and domestic economic recovery is acceptable, especially the domestic epidemic prevention situation is good, and the domestic textile and clothing consumer side continues to be in the recovery stage, especially the demand for home textiles is good, and orders from domestic textile companies are The situation continues to be good, and a small number of foreign orders are returning. The future consumption expectations of cotton are relatively stable.
In April and July, the price of lint cotton increased, which will lay a supporting foundation for the upward trend of seed cotton.
As of early August, the spot price of domestic lint futures has risen to a high level. In the absence of interference from black swan factors from August to October, there will be far more positive factors than negative factors in the future lint cotton spot market. Prices will continue to rise, and seed cotton as a raw material will receive strong support.
5. The global monetary policy will be relatively loose throughout the year, and the domestic monetary policy will be stable in the second half of the year to maintain reasonable and sufficient liquidity.
3. High lint production costs increase the operating risks of ginning companies
According to Zhuochuang Information It is estimated that if the machine-picked seed cotton in Xinjiang is calculated at 7.7 yuan/kg, the impurity loss is calculated at 10%, the cotton seed price is calculated at 2.8 yuan/kg, and the processing fee of the ginning enterprise is 1,000 yuan/ton, the equivalent of lint processing cost is about 18,100 yuan/ton, which is less than Last year, the price increased by about 2,600 yuan/ton. If short-term storage and warehousing and warehousing fees are added, the cost of Zheng cotton warehouse receipts will increase significantly compared with last year.
Due to the surge in operating profits of ginning companies last year, foreign contractors are still more enthusiastic about contracting in Xinjiang this year. The contracting fees for some production lines in northern Xinjiang have risen from more than 2 million to about 3 million. On the one hand, the cost of harvesting seed cotton raw materials has increased significantly. On the other hand, contracting investment has increased. When looking forward to high prices for new cotton, the operating risks of ginning companies have also increased. It has now become a lingering concern for many production companies. A sword.
To sum up, it seems that the high price of new cotton has become a common trend in the market this year.It is understood that the seasonal production and annual sales characteristics of cotton will lay the foundation for high-cost new cotton to form a strong support for the market price in the next year. Therefore, the upcoming rush to harvest new cotton may once again become the main driving force for the rise in cotton prices in the short and medium term. If the rush to harvest intensifies, the probability of seed cotton prices opening higher will also increase. Of course, there are uncertainties about whether the Federal Reserve will raise interest rates in the future, the development of the global epidemic, and the Sino-US trade situation, which may disrupt the cotton market in the medium to long term. Therefore, under the expected evolution of the “grey rhino” market, preventing adverse risks is still the key to this year’s new cotton market. </p
