Cotton Prices Rise, Business Anxiety Is Not Reduced

Since the beginning of this week, cotton prices are showing strong trend. Zheng cotton's main contract rose from 11400 yuan per ton last Friday to 11750 yuan / ton recently, and the US cotton main contract also broke through the key position of 60 cents / pound from 56 cents / pound. From the background and main factors that affect the price increase, there are several aspects:

First of all, it was boosted by good news such as the development of the new crown virus vaccine. The three major U.S. stock indexes have been rising since May and are approaching the high level. In the crude oil market, US crude oil futures and Brent crude oil futures rose to nearly three weeks high. Some investors think OPEC's production plan will still have positive effects on oil price rise. The next is the dry weather in Texas, the main cotton producing area in the United States, and the locust disaster in India and Pakistan. The stimulus of good news and the anticipation of market expectations have made the difficult cotton market a glimmer of dawn.

Although cotton prices have risen, but from the Xinjiang professional regulatory database and part of the mainland warehouse feedback, recent cotton turnover is not very ideal. Some cotton trading companies holding inventory said that after the two years' cotton textile industry encountered the Sino US trade war and the impact of the epidemic, textile enterprises were particularly cautious about the purchase of cotton. Some enterprises in the early stage suffered losses due to a large number of concentrated stockpiling, and now they have strict control over raw material stocks and quantity of purchases. Now entering the textile off-season, the number of inquiries to buy goods is very few, so there is still concern about the late cotton market. Near the end of June, some cotton enterprises increased their pressure on loans, but the slow pace of transactions made many Cotton Traders somewhat "calm". According to the size of the shipments of some cotton sales enterprises, the order this year is only about half of last year. The most serious problem now lies in the lack of demand.

With the gradual control of foreign epidemic situation, cotton textile industry in the process of continuous repair, when cotton purchase and sale will be able to get out of the predicament, is the focus of many cotton processing enterprises and traders. I believe that when demand side is not improving, cotton rebounding will go through many twists and turns. Therefore, it is suggested that the industry should guard against arrogance and impetuosity, adjust business strategy in a timely manner, clarify market positioning and seek survival in the predicament.