Market Analysis: The International Price Decline Caused The Cotton Market Range Shocks

In the past week, the average price of fancy yarn at home and abroad continued to decline, the international price fell more than the domestic price, and the internal and external price difference continued to shrink. From March 25 to 29, the average price of national cotton price B index representing the market price of standard lint in the mainland was 16964 yuan/ton, down 94 yuan/ton from the previous week, or 0.6%; The average settlement price of the main contract of Zhengzhou cotton futures was 15938 yuan/ton, down 61 yuan/ton from the previous week, or 0.4%.

The international cotton index (M), which represents the average landed price of imported cotton in China's main ports, averaged 101.47 cents/pound, down 1.42 cents/pound from the previous week, or 1.4%; Converted into RMB, the import cost is 17493 yuan/ton (calculated by 1% tariff, excluding port miscellaneous and freight), down 245 yuan/ton or 1.4% from the previous week. The average settlement price of the main contract of cotton futures in New York was 91.9 cents/pound, down 0.87 cents/pound from the previous week, or 0.9%.

The average price of international cotton is 529 yuan/ton higher than that of domestic cotton, 151 yuan/ton lower than that of the previous week. The average price of 32 domestic ordinary combed cotton yarns was 23160 yuan/ton, down 107 yuan/ton from the previous week; The average price of conventional outer yarn is 23941 yuan/ton, 354 yuan/ton lower than the previous week, and 781 yuan/ton higher than that of domestic yarn; The average price of polyester staple fiber is 7354 yuan/ton, down 15 yuan/ton from the previous week.

The cotton planting area and the US cotton export report were favorable, and the international cotton price was supported in the short term. With the approaching of the cotton planting season in the northern hemisphere, the cotton planting situation in the main producing countries has attracted market attention. According to the report of the US Department of Agriculture, the US intends to plant 10.7 million acres of cotton in 2024, which is lower than the forecast of 11 million acres by the US Agricultural Outlook Forum in February. In addition, with the rapid decline of international cotton prices from high levels, the willingness of the United States to sign contracts for cotton exports has increased. From March 15 to 21, the United States signed 25300 tons of upland cotton in 2023/24, an increase of 4100 tons over the previous week, which also provides some support for international cotton prices. To sum up, the export situation of American cotton and the seeding situation of new cotton are still the focus of attention at this stage, and the short-term international cotton price is expected to stop falling and stabilize.

The performance of the textile market is poor, and the domestic cotton price is mainly weak and volatile. The domestic cotton supply is abundant in stages, while the downstream textile market "Jinsan" performs poorly. According to the recent survey of China Cotton Network, the current start-up rate of some textile enterprises in Shandong and Henan is still at a high level, but the order sustainability is difficult to guarantee, and it can be maintained until the first half of April. The pure cotton yarn market is highly competitive, the price of combed yarn continues to decline, and the enterprise is in a loss. Cotton procurement can only be done as you use it, and the market is generally pessimistic about the future market.

In late March, the temperature in Xinjiang has warmed up, and cotton spring sowing has been gradually carried out from south to north. Farmers in some areas reported that the planting area of hand picked cotton will decrease year on year. On the whole, the domestic textile terminal consumption is difficult to improve, but the international cotton price is expected to stop falling and stabilize and the cotton planting area is expected to decline in the new year. It is expected that the domestic cotton price may continue to maintain range shocks.