Market Trends: Analysis On The Future Trend Of Cotton Prices At Home And Abroad

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This week, cotton prices at home and abroad rose; The price of domestic cotton yarn rose, while the price of foreign yarn rebounded slightly; Domestic polyester staple fiber prices continue to fall.

1、 Domestic cotton price fluctuates at a high level

This week, the hot weather in many places in Xinjiang strengthened the market's concern about the growth of new cotton. At the same time, the release of the reserve cotton rotation policy eased the expectation of tight inventory in this year to some extent, and the domestic cotton price remained high and volatile. On July 17-21, 2023, the average settlement price of the main contract of Zhengzhou cotton futures will be 17118 yuan/ton, 116 yuan/ton higher than the previous week, or 0.7% higher; The national cotton price B index, which represents the market price of standard lint in the mainland, averaged 17750 yuan/ton, up 271/ton or 1.6% from the previous week.

2、 International cotton prices rise

This week, the hot weather in the US cotton producing areas intensified supply concerns, and the latest report that US cotton exports increased last week, and international cotton prices rose. On July 17-21, 2023, the average settlement price of the main contract of cotton futures in New York was 81.89 cents/pound, up 0.67 cents/pound or 0.8% from the previous week; The international cotton index (M), representing the average landed price of imported cotton in China's main ports, averaged 95.3 cents/pound, up 1.49 cents/pound or 1.6% from the previous week; Converted into RMB, the import cost is 16606 yuan/ton (calculated by 1% tariff, excluding port miscellaneous and freight), up 260 yuan/ton or 1.6% from the previous week. The domestic cotton price is 1144 yuan/ton higher than the international cotton price, and the price difference is 11 yuan/ton larger than the previous week.

3、 The price of domestic cotton yarn rose, while the price of foreign yarn rebounded slightly

This week, the textile market continued its off-season, with most spinning profit losses. Driven by the rising price of cotton raw materials, the domestic cotton yarn price rose. In the outer yarn market, the export situation of Southeast Asian textiles and clothing is still poor. The price of outer yarn rebounds slightly with the raw materials, and it is weak to keep up with the rise. At present, the average price of conventional outer yarn is 913 yuan/ton lower than that of domestic yarn. The domestic grey cloth market sales are light, and the subsequent intention orders received by the cloth factory are insufficient. The price of cotton cloth is mainly stable. Polyester staple fiber prices fell with PTA.

4、 Future prospects

International cotton prices are facing adjustment. The latest research report of the Federal Reserve shows that the excess savings accumulated by American residents during the epidemic have been exhausted. Some institutions predict that US consumer spending will weaken in the fourth quarter of this year, which may have an impact on the US economy. The former chairman of the Federal Reserve said that the interest rate hike in July may be the last time for the current tightening action. The Federal Reserve's interest rate meeting next week needs close attention. In terms of cotton market, the poor seedling rate in the United States has increased. As of July 16, 2023, the budding rate of American cotton is 64%, 9 percentage points higher than the previous week, and 8 percentage points lower than the same period last year; The proportion of American cotton growing well accounted for 45%, 3 percentage points less than the previous week and 7 percentage points higher than the same period last year. The monsoon rains in India have led to the backward progress of cotton planting, and the output in the new year is expected to decrease by 14% year on year. In terms of the textile market, due to the global economic downturn, Cambodia's clothing industry exports continued to decline, and a large number of factories are facing a tide of production halts and layoffs. The United States is Cambodia's largest clothing export market. From January to June, Cambodia's clothing exports to the United States fell 8.9% year on year. In the short term, the external market and weather factors have a significant impact on the cotton market, but the consumer market is still weak. It is expected that cotton prices may be adjusted after a rapid rise.

The reserve cotton wheel is coming out, and the rise of cotton price encounters resistance. In the first half of 2023, China's GDP will grow 5.5% year on year, 1.0 percentage points faster than that in the first quarter, indicating the overall recovery of China's economic growth; As for the economic growth prospect in the second half of the year, relevant experts said that with the accumulation of positive factors to promote development, the economy is expected to continue to recover. The policy strength may be based on supporting the economy, and the probability of strong stimulus is small. In terms of cotton market, Xinjiang continues to experience high temperature weather, and local cotton farmers said that they have not had a significant impact on the growth of cotton seedlings. Recently, most ginning plants in Xinjiang began to repair their equipment, preparing in advance for the purchase of seed cotton in the new year. At present, the cotton sales of this year are nearing the end, and some enterprises said that the market has limited resources available. With the implementation of the policy of cotton reserve rotation, it will ease the expectation of tight domestic cotton stocks and provide guarantee for downstream textile mills to use cotton. In the short term, the rise in cotton prices is inconsistent with the actual demand for downstream gauze, and yarn prices are weak. Reserve cotton rotation will ease the expectation of tight supply