Cotton Prices Remain Strong: Domestic Cotton Supply Will Be Surplus Before Next March

Although the policy is basically in line with market expectations, after the introduction of the details, there are relatively few variables. The sale time for new flowers is only 3 months, and there is also a gap in the Spring Festival. The actual sales time is very limited. In the early days, cotton spanport difficulties in Xinjiang area were overlooked, and cotton prices remained strong in anticipation of the replenishment of textile enterprises. But in recent years, spanport bottlenecks in Xinjiang have gradually eased, and supply in the mainland has increased. By analyzing the supply and demand pattern, we can see that the supply of cotton will be surplus, cotton prices will slow down in March next year.

This year, the spanportation problem in Xinjiang is prominent, leading to difficulties in spanporting Xinjiang cotton, resulting in the shortage of Xinjiang cotton resources in the early stage and supporting cotton prices. Due to the large quantities of materials needed for outward spanportation, spanportation in Xinjiang area was relatively tense at this time of the year. But this year, there are several new situations. First, the new spanport policy has been strictly controlled this year, resulting in insufficient spanport capacity and substantial increase in freight rates. Two, the rise in commodity prices this year has brought great pressure to the government. In order to solve the key problems first, the main spanportation capacity is tilted to more important varieties, and the capacity allocated to cotton is limited. Three, the weather is bad this year, and the winter is earlier and colder, which adds additional obstacles to spanportation. But with the passage of time, spanportation of fruits and other goods gradually reduced, and spanport capacity tilted towards cotton.

According to statistics of China cotton information network, November Xinjiang Professional warehousing and export cotton increased by 23 thousand and 500 tons, a year-on-year decrease of 123 thousand and 600 tons, a total of 94 thousand and 400 tons, a decrease of 123 thousand and 600 tons compared with the previous year, and 263 thousand and 100 tons of road spanportation, an increase of 144 thousand and 700 tons, a decrease of 39 thousand tons compared with the same period last year. Although the year-on-year data is still poor, the ring data increase significantly, and there is still room for strengthening later capacity. There is also a downward trend in freight rates. At present, the spanport price of Xinjiang to Shandong has been reduced by nearly 200 yuan / ton, which proves the ease of spanport capacity bottlenecks from another angle.

Inland New cotton More and more, it is also reflected in the futures market. At present, 744 registered futures warehouse receipts, an increase of 153 over the previous lows, and 1981 warehouse receipts, an increase of 1700 or so over the previous period. This means that the supply of new cotton has increased considerably in the mainland, and there are nearly 100 thousand tons of supply in the futures market alone.

The NDRC and the Ministry of Finance jointly issued a notice on cotton in the new year. Dumping and storage policy Publicity was made to clarify some details of dumping. The government issued a policy in advance to express their attitude towards the cotton market. Although the policy of throwing and storing up this year has achieved good results, the uncertainty of the policy has led to a big fluctuation in cotton prices, which the government does not want to see. Next year, we will draw lessons from this year to avoid the same mistake, so we will release some policy details in advance, clarify market expectations, and hope that the cotton market will run smoothly.

Cotton prices continue to uplink in the early stage, putting pressure on policy departments and announces policies at this node, apparently to curb the upward trend of cotton prices. From the policy point of view, it will start dumping in March 6th next year. By the end of August, in the past 6 months, according to the daily listing of 30 thousand tons, as well as the increase in listing and sales deadline, it will mean how much the supply will be thrown next year, and the market demand will be fully satisfied, and there will be no shortage of supply.

Through the author's small scale investigation, it is found that some textile enterprises in China still have stock of national cotton reserves in December, and many traders also sell national cotton stores on the market, indicating that as a result, the State Cotton stores also account for a large share of consumption. For example, according to the volume of textile enterprises' replenishment to the end of March next year, the demand for new flowers in the mainland will meet the 4 month's consumption of textile enterprises, and the consumption of 600 thousand tons / month will be 2 million 400 thousand tons. The total output of cotton this year is 4 million 500 thousand tons, excluding the remaining 1 million 200 thousand tons in the Xinjiang area, with a supply of 3 million 300 thousand tons. This means that by next March, nearly 1 million tons of new cotton have not been sold on the market, and will face strong competition pressure from national cotton reserves. The downward pressure on cotton prices will be greater.

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