Cotton city wait-and-see atmosphere strong cotton prices rise and fall in dilemma

In late September, domestic cotton prices plummeted, resulting in a pessimistic atmosphere in the cotton market. On the return of National Day, the main futures of Zheng Cotton continued to fluctuate around 15600 yuan / ton. The spot price of lint cotton dropped slightly by 200 yuan / ton, which aggravated the psychological burden of flower ginning enterprises. Therefore, some enterprises either reduced the purchase price of seed cotton or stopped watching.



The cumulative output of cotton reserves was 2 million 506 thousand tons

In September 30th, 2018, the end of the rotation of cotton reserves began in March 12th and lasted for 7 months. A total of 4 million 312 thousand tons were planned, and the actual turnover was 2 million 506 thousand tons, with a turnover rate of 58.1%. Among them, Xinjiang cotton transaction 1.559 million tons, accounting for 62.2% of the total volume, real estate cotton transaction 947,000 tons, accounting for 37.8%; from the transaction price point of view, the average transaction price of 14,770 yuan / ton, reduced to standard (3128) price of 16,385 yuan / ton. In terms of the types of enterprises, there were 836 trading enterprises in this year, of which 668 were textile enterprises with 1.9 million tons and 168 were traders with 610,000 tons. A week before the National Day (September 25-September 30), a total of 196,000 tons of cotton were planned to be released from the warehouse, with a weekly turnover rate of 48.1% and a decrease of 4.6 percentage points. Among them, 72,000 tons of Xinjiang cotton and 22,000 tons of Mainland cotton were traded, with a turnover rate of 22%.



Seed cotton purchase price basically stable

Before and after the National Day, most of the cotton is in the period of boll-opening and picking. The main cotton areas are sunny and fine weather with sufficient sunshine and less precipitation. The meteorological conditions are generally conducive to boll-opening and picking and drying of cotton. Before the National Day, Xinjiang machine-picked cotton began large-scale picking, domestic and foreign spot prices have fallen, seed cotton acquisition prices have also slightly dropped; during the National Day, the acquisition price operation remained basically stable. At present, the purchase price of hand picked cotton in Xinjiang is 7.0-7.4 yuan / kg, and that of machine picked cotton seed cotton is 6.0-6.3 yuan / kg, which is basically the same as last year's purchase price. The price of mainland seed cotton purchase is relatively small, most of them are between 6.9-7.2 yuan / kg, which is basically the same as before the holiday.



Market prices both at home and abroad dropped by

Spot prices of cotton at home and abroad have fallen due to the imminent large-scale listing of new cotton, unpredictable orders from spinning mills and interest rate hikes in US dollars. On Oct. 5, China's cotton price index (3128B) closed at 16,086 yuan per ton, down 251 yuan in two weeks, and the Cotlook A index closed at 85.35 cents per pound, down 2.75 cents in two weeks. CF901, the main cotton contract of Zhengzhou Commodity Exchange, closed at 15645 yuan / ton on September 28, down 465 yuan a week; ICE cotton futures recently closed at 76.49 cents / pound on October 5, down 2.79 cents in two weeks.



Since a large number of Xinjiang cotton market in October, the average price of machine-picked cotton seed cotton in northern Xinjiang has dropped from 6.3 yuan / kg to 5.9 yuan / kg, and that of hand-picked cotton in southern Xinjiang has dropped from 7.4 yuan / kg to 7.2 yuan / kg. Some cotton farmers feedback, the current price has been lower than last year's purchase price, the cost of growing cotton increased, but the price of cotton fell so that some cotton farmers a little unacceptable. According to the current market, I believe that cotton prices are short of ups and downs are lacking enough support. The main reasons are as follows:



1. The current decline in seed cotton prices has a certain impact on cotton farmers'bullish psychological expectations. Whether in Xinjiang or the Mainland, cotton farmers are keen to sell at a high price. Most cotton farmers resist selling at a low price or slow down the pace of delivery and wait-and-see, and continue to reduce the price of acquisition or more difficult.



2, the cost of pre purchase of ginning enterprises is relatively high, selling lint or losing money at current prices. At present, Xinjiang 2018 hand-picked cotton gross weight quoted 16100-16500 yuan / ton, the Mainland good four new real estate cotton quoted in 15300-15500 yuan / ton, profit is slim, or even cost and price upside-down. After the recent decline in cotton prices, downstream inquiry procurement slowed down, the actual sale of new cotton “ Market-Free ” ginning enterprises bear greater pressure, processing operations more cautious.



3. At present, Xinjiang cotton sales progress is still slow in 2017/18, the digestion of new cotton market formation of greater resistance, early bullish expectations of overdraft of some textile enterprises demand, short-term cotton market shocks, downstream prudent order purchasing, mainly to digest inventory. Therefore, the sale of new cotton is difficult.



4. The instability of Sino-US trade relations, the depreciation of the RMB, the reduction of the central bank, the weak operation of cotton in the interior and exterior market period, and the approaching of the sliding standard tax have all aggravated the uncertainty of the cotton market trend. The market wait-and-see atmosphere is shrouded in difficultly, short-term business confidence is insufficient, the mentality is blurred, and cotton prices are difficult to rise and fall.