Zhengmian futures
As of November 17, the number of warehouse receipts of Zhengmian was 1228, and the new warehouse receipts were only 134, which also greatly boosted the near-month contract. On November 18, the CF2301 contract opened at 13450 yuan, continuing to reduce positions and rebounded strongly, with the highest 13590 yuan, the lowest 13435 yuan, and closed at 13555 yuan, up 135 yuan. The purchase of seed cotton is in the closing stage, the price is mainly stable, the cost of lint cotton is determined, the flower factory is actively selling, the downstream cotton yarn market is still weak operation, the transaction is flat, the textile enterprise purchases cautiously, to sell and order, the pressure of finished product inventory rises, and the negotiation is mainly to take goods. On the whole, the slow listing of new cotton has led to insufficient number of warehouse receipts, the price continues to rebound, and in the later period, with the increase of public inspection volume, supply pressure gradually increases, and the price rebound is expected to be highly limited.
New York futures prices
On November 17, the December contract was 87.04 cents, down 140 points; the March contract was 85.28 cents, down 148 points; the volume was 28,856 lots, down 10,646 lots. Last week's dismal U.S. cotton export signing disappointed the market, and the rebound in the dollar and the decline in U.S. stocks also dragged down cotton prices, and ICE cotton futures closed sharply lower. Regarding the prospect of a Fed rate hike, there are both positive and negative voices, market sentiment still fluctuates with the trend of the dollar, and cotton consumption needs more time to recover, cotton prices are expected to fluctuate around 85 cents, waiting for real positives.
Cotton price tracking
On November 18, the average price of imported cotton to Hong Kong (M index) was 105.55 cents / pound, down 1.85 cents / pound from the 17th, discounting 1% tariff import cost (excluding Hong Kong miscellaneous fees) 18215 yuan / ton, and discounting quasi-tax import cost (excluding Hong Kong miscellaneous fees) 18340 yuan / ton; The average domestic 3128 cotton price (B index) was 15191 yuan / ton, up 12 yuan / ton from the 17th. Xinjiang cotton Shandong to the factory price of 3128B grade 15285 yuan / ton, up 5 yuan / ton from the 17th. The national cotton basis index CNC ottonJ (CF2301) was 1558 yuan / ton, down 27 yuan / ton from the 17th.
Cotton market news
Domestic cotton market: According to the feedback of some cotton processing enterprises in Kuitun, Changji, Shihezi and other places, because the harvest of seed cotton in northern Xinjiang has entered the end (seed cotton grade, quality indicators have declined, moisture has increased), coupled with sleet and snow in some areas, resulting in farmers' sales and ginning plant purchase progress has slowed down, 40 garment points, 12% within 12% moisture, 12% containing miscellaneous machine seed cotton purchase price stable 5.80-6.0 yuan / kg, the focus of enterprises from seed cotton purchase to processing, transportation storage, public inspection and sales; The purchase price of seed cotton in southern Xinjiang continued to rebound and the relaxation of epidemic prevention and control, driven by the continuous rebound of Zhengmian's main CF2301 contract and the acceleration of cotton processing enterprises, and the purchase price of standard seed cotton within 40 clothing points and double 12% exceeded 6.0 yuan / kg as a whole, reaching 6.0-6.10 yuan / kg (the highest purchase price of 40 clothing points in southern Xinjiang reached 6.20 yuan / kg on November 17).
A processing plant in Aksu said that since mid-November, farmers' reluctance to sell has weakened, and some ginning plants that have not opened or purchased due to epidemic control in the early stage, slow processing plants have begun to make efforts, and the harvest of seed cotton in southern Xinjiang has entered the peak period and other factors have made the market more active, and the confidence of processing enterprises has continued to recover.
From the statistical point of view, in recent days, Xinjiang cotton area not only the daily processing of lint cotton is stable at more than 60,000 tons, but also the progress of public inspection has also accelerated significantly, from June 15 to 17, the new lint public inspection volume reached 31,600 tons, 31,200 tons and 39,900 tons respectively, so that the probability of long forced positions CF2301 contract continues to decline. However, from the survey point of view, although the main contract of Zhengmian broke the 13,500 strong resistance level this week, up more than 500 points since mid-October, the spot quotation of Xinjiang cotton in Xinjiang storage warehouses inside and outside Xinjiang still did not respond to the upward adjustment, processing enterprises grasped the quotation shipment, wait-and-see, sales sentiment is relatively weak.
On November 18, the price of "double 28/double 29" machine cotton picking in Xinjiang supervision warehouse was 14,000-14,150 yuan / ton, and the price of "double 28/double 29" in Henan, Shandong, Jiangsu and other inland warehouses was 15,100-15,200 yuan / ton, although the price difference between Xinjiang and abroad remained above 1,000 yuan / ton, but due to factors such as the sharp increase in Xinjiang cotton highway shipments since late October, the gradual relaxation of epidemic prevention and control, etc., the price difference narrowed by more than 100 yuan / ton. Industry analysis, with the rapid acceleration of Xinjiang cotton processing and public inspection in November and December, cotton spinning mills, cotton traders, and futures companies will also increase their entry into the market, and the Xinjiang cotton sales market is expected to become more and more "lively".
International cotton market: In 2022, the southwest cotton area and western cotton area of the United States will experience a long period of high temperature and drought, and the southeast cotton area will experience heavy precipitation and tropical storms, and most institutions, international cotton merchants, and cotton-using enterprises will have strong concerns about the decline in U.S. cotton production in 2022/23 and the low compliance rate of grade and quality batch indicators.
In contrast, Brazilian cotton and Australian cotton production in 2021/22 not only increased significantly year-on-year (the latest forecast of the Brazilian Cotton Producers Association is 2.5 million tonnes in 2021/22; Production in 2022/23 is expected to be 3.1 million tonnes; Australia will reach 1.25 million tons in 2021/22, a record high), and the quality of lint cotton is better (from the results of Australian cotton commodity inspection, the length of 1-5/32, 1-3/16 is significantly higher than the previous two years), market participants expect that Brazilian cotton and Australian cotton will compete more fiercely with US cotton in the export market in 2022/23. According to the Australian Cotton Association, 95% of Australia's new cotton has been sold in 2022 and 36% in 2023, according to the Australian Cotton Association. It shows that Australian cotton has been concentrated and entered the circulation link in 2021/22.
Compared with US cotton in 2022/23, Australian cotton port resources are small, while Brazilian cotton is less cost-effective. At present, the port bonded Australian cotton SM 1-5/32 is 110 cents / pound, which is the same as the US cotton 21-2 37 (strong 29GPT) or slightly lower than 1-2 cents / pound, while the RMB quotation of customs clearance Australian cotton M 1-5/32 Australian cotton is slightly higher than that of US cotton 31-3/31-4, but because the port bonded and customs clearance Australian cotton quantity is too small, buyers have few choices and opportunities to pick goods. In addition, 11/12/1/2 months Brazilian cotton is quoted 2-4 cents/pound higher than U.S. cotton, which lacks sufficient competitiveness.
Affected by the Fed's continuous interest rate hike, inflation, the epidemic and the Russian-Ukrainian war, the global cotton textile and clothing consumption has declined prominently, especially the performance of high-grade high value-added orders, including China, Southeast Asia, Turkey and other textile enterprises on the demand for high-index high-grade cotton is seriously insufficient, so Australian cotton and some high-index Brazilian cotton may be difficult to make a big difference, while the main cotton producing areas of U.S. cotton are affected by extreme weather, the supply of low-quality cotton has risen, but it matches the actual demand of purchasing enterprises in Southeast Asia and other countries is high. Spinning mills in Vietnam, Pakistan, India, Indonesia and other countries are the "iron powder" of U.S. cotton, which recognizes quality, spinnability and consistency, and it is more difficult for Brazilian cotton and Australian cotton to seize share.
In addition, the escalation of the ban on cotton imports from Xinjiang by the United States and the European Union has affected the spillover of textile and apparel suppliers in Southeast Asia, South Asia and other countries, which is conducive to U.S. cotton exports in 2022/23. According to the feedback of some foreign trade companies in Guangdong, Jiangsu and Zhejiang and other places, due to concerns that traceability orders will be detained and destroyed by US customs, not only some textile and apparel buyers in the United States, the European Union, Japan and other countries require the use of U.S. cotton processing orders, but also the entrepot trade orders of Vietnam, Bangladesh, Cambodia and other countries also explicitly use U.S. cotton; The same situation is common among export enterprises in Southeast Asian countries, and U.S. cotton is given special "care".
(Source: China Cotton Network)