According to statistics of SunSirs, as of February 10, 2020, the average price of domestic lint spot market was 13,448 RMB/ton, down 1.10% comparing with last Monday (February 3), down 13.43% on year-on-year basis. On the first working day after the Spring Festival, domestic lint stocks fell sharply, followed by signs of recovery.
Due to the control measures for the epidemic, most areas continued to postpone construction, and the market's worries about the low demand for cotton eased. After the Spring Festival, Zhengzhou cotton's main starting point fell and stopped, and lint spot also dropped rapidly. At this time, the reserve cotton rotation has become the focus of market attention. On the one hand, last week, the number of reserve cotton single day rotation increased continuously, and finally stabilized at 18,000 tons, with a transaction rate of nearly 100%. On the other hand, the transaction price of reserve cotton is 13,195- 14,135 RMB/ton, with an average price of 13,700 RMB/ton. Zhengzhou cotton rebounded to the top of 13,000 RMB/ton from around 12,600 RMB/ton. However, according to the calculation formula of Xinjiang cotton round entry price issued by the State Food and materials reserve bureau and the Ministry of finance, the maximum price limit for bidding (February 10-14) is 13,715 RMB/ton, and the price of reserve cotton round entry is expected to go down this week. In the middle of February, China resumed work. The expected recovery of cotton demand increased market confidence. Dealers' wait-and-see mood was strong, and lint prices stopped falling.
The US cotton signed a contract to keep the high-speed loading volume at a new high. According to the report of the U.S. Department of agriculture, on January 24-30, 2020, the net contracted volume of U.S. upland cotton in 2019/20 was 75,400 tons, 4% less than the previous week, 28% higher than the average value of the previous four weeks, and the ICE cotton futures stood at 68 cents/pound again from February 4-6.
Analysts from SunSirs believe that at present, most of the cotton spinning enterprises have not returned to work, coupled with limited transportation, and the actual sales are not smooth, so the storage of cotton wheel has become the focus of attention. The daily listing volume increased by 11,000 tons, and the transaction rate was almost 100%. In the near future, it has become a pricing vane. Market confidence has picked up and cotton prices are expected to remain stable.
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