[Summary] Domestic cotton prices or will continue to be low shocks. The traditional peak season of the textile market is approaching, but the actual demand has not yet emerged, the probability of textile enterprises to open is still declining, and the price of cotton yarn continues to fall. At present, the domestic new cotton growth is good, the production increase is expected to remain unchanged and the listing time may be earlier than last year. At the same time, the cotton import sliding tax quota will be issued soon, and the downward pressure on domestic cotton prices will not decrease.
I. This week’s price review
From August 12 to 16, the average settlement price of Zhengzhou cotton futures main contract was 13,480 yuan/ton, down 192 yuan/ton from the previous week, down 1.4%; The national cotton Price B index, which represents the market price of standard grade lint in the mainland, averaged 14,784 yuan/ton, down 290 yuan/ton from the previous week, or 1.9%. New York cotton futures main contract settlement average price of 67.7 cents/pound, up 0.03 cents/pound from the previous week, basically flat; The average price of the international cotton index (M) representing the average landed price of imported cotton in China’s main port was 76.32 cents/pound, up 0.5 cents/pound from the previous week, and the import cost of RMB 13,211 yuan/ton (calculated by 1% tariff, excluding Hong Kong miscellany and freight), up 88 yuan/ton from the previous week, an increase of 0.7%. The domestic cotton price is 1573 yuan/ton higher than the international cotton price, which is 378 yuan/ton narrower than the previous week. The average price of domestic C32S general comb pure cotton yarn is 21,758 yuan/ton, down 147 yuan/ton from the previous week. The price of conventional yarn is 22222 yuan/ton, which is the same as the previous week. The price of polyester staple fiber is 7488 yuan/ton, down 64 yuan/ton from the previous week.
Second, the near-term market outlook
(1) International market
Favorable factors have appeared, cotton prices or will stabilize. The U.S. Department of Agriculture’s August supply and demand report forecast U.S. cotton production of 3.29 million tons in 2024/25, a decrease of 410,000 tons from the previous month, mainly due to the recent worsening drought in the U.S. cotton producing region. The USDA Drought Monitor reports that about 22 percent of cotton producing areas are drought-affected as of this week, up from 13 percent the week before. According to statistics from the Indian Ministry of Agriculture, as of August 8, 2024/25 India’s cotton planting area was 166 million mu, down 8.9% year-on-year, and the production is forecast to decrease by 370,000 tons year-on-year. Meanwhile, U.S. Commerce Department data showed that U.S. retail consumption rose 1 percent in July from the previous month, the highest level since February 2023, making the market less worried about the U.S. recession, providing support for the improved sentiment in the commodity market. According to the United States Commodity Futures Trading Commission report, as of August 6, ICE cotton futures commercial (producers, traders, processors) net long position 1156, for the first time since 2019 to turn net, meaning that industry funds believe that international cotton prices or have entered the low valuation range. Combined with the above factors, international cotton prices are expected to stabilize.
(2) The domestic market
Downstream demand did not see the start, cotton prices continued to fluctuate at a low level. According to the National Bureau of Statistics, the retail sales of clothing, shoes, hats and textile products in China in July were 93.6 billion yuan, down 5.2% year on year; Customs data showed that China’s textile and garment exports in July were 26.8 billion US dollars, down 0.5% year on year. Since August, the domestic market has been looking forward to the upcoming “gold nine silver ten” traditional demand season, but orders have not yet shown signs of improvement. According to the national cotton market monitoring system survey, in early August was a sample survey of textile enterprises to open the probability of 73.6%, down 0.8 percentage points from the previous month, only individual coarse yarn varieties show certain signs of warming, the terminal market wake-and-see atmosphere is still heavy, this week domestic cotton yarn prices continue to fall. At present, the growth of cotton is better, it is expected that the listing time of cotton may be earlier than last year, and the cotton import sliding tax quota is about to be issued, which may form further pressure on domestic cotton prices, and the possibility of continuing low shocks is greater.
Post time: Aug-19-2024