Cotton Prices Rise Too Fast, Orders Dare Not Accept

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The number and production capacity of ginning plants in Xinjiang have increased rapidly in the past two years. In the case of good demand, there will still be a rush to harvest.

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For the late trend of cotton prices, to maintain caution, no one dare to have a positive view of the future price.

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As of July 20, the average price of China's cotton price index (3128b) was 17096 yuan / ton, up 40.57% year-on-year; The closing price of the main contract of Zheng Mian futures was 16685 yuan / ton, up 39.27% year on year. Since the middle and late May alone, the main contract of Zhengzhou cotton futures has increased by nearly 1500 yuan / ton.

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Cotton inventory crisis, order price is not appropriate, resulting in spinning enterprise profits are quickly compressed. About 1000 yuan / ton of spinning profit was swallowed up. This means that before the cotton yarn price rises obviously, receiving a "cheap" order is equivalent to bearing the risk of making less money in the future.

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It is worth noting that in the near future, the "two boots" that affect the price of cotton have been landing one after another. On July 2, the long-awaited reserve cotton round was finally launched, with a planned round reserve of 600000 tons; On July 21, the quota of sliding tax on the import of 700000 tons of cotton was further issued, and some enterprises have obtained the quota certificate.

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Whether it is to abandon storage or quota distribution, both increase the phased supply, the impact on cotton prices should be empty. However, the trend of cotton price did not follow the common sense of "playing cards", but rose again and again, which made many people in the industry stunned. On July 22, the main contract of Zheng Mian futures rose rapidly in the end of the day, reaching a maximum of 17175 yuan / ton, a new high since September 2018.

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Why cotton prices continue to rise without fear of bad luck? What are participants in the cotton industry experiencing?

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What kind of attitude does the industry hold on the cotton price in the new season? The Economic Observer learned by visiting a number of enterprises in Xinjiang that industry insiders generally expect that the new flowers will be snapped up by several percent this year. The market will trade ahead of time and the market is expected to further push up cotton prices. However, risks are everywhere. The current industrial situation is that "everyone is afraid, but no one flinches."