According to feedback from cotton trading companies in Jiangsu, Henan, Shandong and other places, the main contract of Zheng cotton stabilized and rebounded last week at 17,000 yuan/ton. The enthusiasm of cotton spinning mills and middlemen to inquire about prices and obtain goods has significantly cooled down. In addition to the “fixed price” “The transaction difference is surprising, and basis point sales tend to be deserted.
A cotton company in Changzhou, Jiangsu Province said that in addition to the increase in the sales price of Xinjiang long-staple cotton in recent days, the turnover inventory of Xinjiang cotton in 2020/21 has been skewed Slowly, the atmosphere of waiting and watching among cotton mills is relatively strong. It is worth noting that the transaction of reserve cotton has been relatively active since late July, which is significantly better than the same period in 2019 and 2020. Some small and medium-sized textile enterprises that did not participate in the reserve cotton auction or did not entrust cotton traders to auction on their behalf directly purchased reserve cotton.
Judging from the survey, currently cotton textile companies not only have large differences in raw material inventories, but also have great differences in their judgments on cotton trends from August to September. One view is that consumption will recover strongly in the second half of the year, and under the favorable influences of increased expectations of higher prices for new cotton in 2021/22, expectations of reduced cotton production in Xinjiang, and the shift from tight to loose monetary policy, cotton futures are still on an upward path and are currently away from the turning point. It’s still early, so the probability of the CF2201 contract breaking 18,000 yuan/ton is relatively high. The operation is mainly to buy goods at low prices.
Another view is more cautious or even pessimistic. They believe that the global and domestic epidemic situation has become tense again, sea freight and surcharges continue to rise sharply, and containers on the US-European routes are extremely tight. Although domestic Textile and clothing companies are relatively prosperous in ordering orders, but their profit margins are low and they even make losses at a loss. At present, 700,000 tons of cotton import quotas with sliding quasi-tax have been issued in batches (valid until December 31, 2021). The rotation of reserve cotton is proceeding in an orderly manner before the end of September. The domestic cotton supply is sufficient, so the CF2201 contract may be in place before and after the new cotton is launched. The price fluctuates between 17,000-18,000 yuan/ton.
A trader in Henan believes that Henan, Jiangsu, Hubei, Hunan and other places have recently suffered heavy rain disasters and epidemic outbreaks, and the prevention and control of various places has been upgraded, which has made cotton spinning mills receive orders, produce, and Transportation, delivery, etc. have been affected to a certain extent, so the support for cotton yarn futures is strong, but it remains to be seen how long it can last. </p
