Market Analysis: Cotton Yarn Price At Home And Abroad Is Suppressed First And Then Raised

The international situation is warming up, and we should be careful of the weakening of international cotton prices. The number of people who applied for unemployment benefits in the United States at the beginning of last week rose for the first time since mid January. The chairman of the Federal Reserve reiterated that interest rates should be raised ahead of time and actively, and the situation in Russia and Ukraine was warming up. As the Iran nuclear agreement entered the final stage, market risks accumulated. In terms of the international cotton market, the National Cotton Council (NCC) of the United States predicts that the intended planting area of cotton in the United States will increase by 7.3% in 2022. According to the USDA report, the contracted and shipment volume of US cotton continued to decrease to 36000 tons and 62300 tons last week, with a month on month decrease of 15.2% and 14.3% respectively. In the international textile market, due to the summer demand has not yet warmed, and India's labor shortage and clothing demand is not good, the international cotton yarn demand has turned bearish.

In February, the U.S. University of Michigan consumer confidence index recorded 61.7, a new low since October 2011, reflecting the lack of consumer power in the terminal clothing market. In the short term, the risk aversion sentiment in the international market is rising suddenly, and the cotton market is expected to focus on the fundamentals again. The international cotton price has shown signs of marginal weakening, and it is necessary to be alert to further weakening of international cotton price.

After the festival, textile demand is not clear, the focus of domestic cotton prices moved down. According to the data of the National Bureau of statistics, in January, the purchase price of textile raw materials increased by 10.0% year-on-year, while the ex factory price of textile and clothing industry increased by only 1.1% year-on-year. The cost pressure of textile enterprises is still significant. In the domestic cotton market, with the decline of Zheng cotton futures, the enthusiasm of cotton spot inquiry has recovered, but the transaction is relatively limited, textile enterprises are still cautious in purchasing.

According to the national cotton monitoring data, as of February 17, 2022, the national lint sales progress was 34.6%, 31.3 percentage points year-on-year. After the Lantern Festival, textile enterprises generally return to work, but the overall time to resume work is delayed compared with last year.

The survey shows that 51% of the enterprises started construction on the seventh day of the first month, with a year-on-year decrease of 21%; 53% of textile enterprises have no orders or short orders; 78% of the enterprises have not received new orders and are processing orders before the year; 64% of the enterprises reflected that after the price of cotton yarn increased, the acceptance of customers such as grey cloth in the downstream was not high. On the whole, the demand of downstream textile market has not been obviously started, the international market is turbulent, the high fall of cotton price causes the market risk sentiment to rise, and the short-term domestic cotton price trend tends to be cautious.