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SunSirs: Spot Cotton Lint Rose 3.02% to Welcome the New Year
January 08 2020 11:15:23SunSirs(Linda)

According to the price monitoring of SunSirs, as of January 7, 2020, the average price of 3128B grade cotton lint in the domestic spot market is 13,754RMB/ton, 403RMB/ton higher than the price in January 1, up 3.02%, down 9.85% year on year

The price of cotton rose sharply. On January 7, the closing price of Zhengzhou Cotton main contract 2005 was 14,215RMB/ton, 240RMB/ton higher than that on January 2. On January 6, ICE futures were trading at 70.04 cents a pound, up 77 cents from January 2.

Since October 2019, domestic spot lint cotton has entered the rebound stage, and cotton price has increased by 9.26% in recent three months. In the second and third quarters of 2019, the cotton market was cold, and the output of new cotton was expected to be good. During this period, the domestic rotation of reserve cotton, the global cotton consumption fell, and the trade pattern became tense. The global cotton year-end inventory hit a new high in nearly 10 years, and the cotton price fell sharply. In October, negotiations on the first phase of trade agreement between China and the United States were in full swing. Meanwhile, market confidence was boosted and cotton prices rose slowly under the stimulation of weather, new cotton production and global cotton inventory reduction. Near the signing of the trade agreement, the market is bullish as the mainstream, and cotton prices keep rising.

According to the price monitoring of SunSirs, as of January 7, 2020, the average price of 32S pure cotton yarn for knitting in Shandong is 22,040RMB/ton, up 0.55% from the beginning of the month, down 10.13% year on year. In 2019, the yarn factory is like a ‘sanding ground’, the order falls, and the yarn price is difficult to keep.

Destocking is the constant theme of manufacturers at the end of the year. Taking advantage of the rising cotton price stage, it is a good time to sell yarn. Because of this, only the manufacturers with fewer stocks raised their prices, and the quotations of those with more inventories were stable. It's hard to raise the price of cotton at the low end of the year. On the one hand, the stock of the mill needs to be digested, its cost is lower than the current level, and the promotion is offset by the price rise effect. Second, the trading scene is changeable. Most textile mills and ginners say that they will not hoard, and that they can also have preferential policies in order to withdraw funds for inventory.

SunSirs analysts believe that the signing of the first phase of trade agreement between China and the United States is near, and textile exports are expected to usher in a turnaround. The continuous rise of cotton price reflects the optimistic attitude of the market, but the orders are reduced at the end of the year, so we should be careful to catch up with the high price. First of all, the supply of cotton is not a problem; second, the price of cotton yarn is rising slowly, and the possibility of rising sharply before the Spring Festival is low. Finally, we should pay attention to the recovery of downstream consumption. Short term market bullish, cotton prices are expected to continue to rise.

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