According to statistics from SunSirs, as of March 11, the average domestic cotton lint market price was reported at 12,731RMB/ton, down 2.89% from the beginning of the month and down 18.20% year-on-year. Adjust the cotton price difference at home and abroad. On March 2, the average domestic lint market price fell by 1.37%, followed by a rise of 0.75% in the rise of foreign cotton, and entered a stable period. On March 9, U.S. stocks fell sharply. The limit of crude oil led Zhengzhou cotton to drop. Domestic stocks fell 3.01% in two days. In early March, the domestic cotton price showed a dilemma of small increase and large decrease. As of March 11, domestic spot prices fell by 2.89% from the beginning of the month.
Domestic cotton market self-regulation
On March 1st, China Reserve Cotton Management Co., Ltd. announced that due to the difference between domestic and foreign cotton prices having exceeded 800 RMB/ton for three consecutive working days, the collection and storage work was suspended. Cotton prices are high internally and externally low, and domestic cotton's competitiveness has declined. At the same time, the production cost of downstream textiles has also increased, which is not conducive to the ecological development of the domestic industrial chain. On March 2 (Monday), the average domestic spot cotton lint price fell by 180 RMB/ton per day, a decrease of 1.37%. The ICE cotton rebounded sharply. After two days of adjustment, on March 3, the domestic and foreign cotton prices shrank to 614 RMB/ton, and the collection and storage work could be restarted in a short time.
Supply exceeds market demand
The market has expressed concern about global economic growth due to the recent increase in foreign cases over China. On February 21-27, 2020, the net contracted volume of U.S. upland cotton for the 2019/20 season was 89,700 tons, an increase of 84% from the previous week, and an average increase of 40% from the previous four weeks, a new high for the year. In contrast, global cotton stocks are expected to increase. In 2019/20, global cotton production and ending stocks are increased, and consumption is reduced by 800,000 bales month on month, of which China is reduced by 1 million bales; global production is increased by approximately 250,000 bales; global ending stocks are increased by 1.3 million bales month on month, increased 3.2 million bales year on year. Against a less optimistic trade background, cotton prices have struggled.
Domestic textiles and garments exports have fallen sharply from January to February
Under the influence of the Spring Festival holiday and the postponement of resumption of work, textile and apparel exports have fallen sharply. The latest statistics of the General Administration of Customs of China show that from January to February 2020, China's textilse and garments export was $ 29.835 billion, a year-on-year decrease of 20.0%. Among them, the export value of textiles (including textile yarns, fabrics and products) was $ 13.737 billion, a year-on-year decrease of 19.9%; the export value of garments (including garments and clothing accessories) was US $ 16.06 billion, a year-on-year decrease of 20.0%.
The price of foreign yarn has dropped, and the domestic wait and see
In early March, cotton yarn traders reported that cotton yarn from India, Pakistan, Vietnam and other places of origin continued to fall. Yarn prices in Shandong are mainly fixed, supplemented by preferential offers. Although cotton prices have shown a downward trend since the resumption of work, the rebound in cotton prices in January has caused textile companies to have higher cotton costs and lower market consumption. Textile companies have a weaker intention to over-produce cotton. They cannot reduce costs by purchasing low-cost cotton. Withdrawal funds are the mainstay. Compared with previous years, the operating rate has decreased, cotton yarn inventory has been reduced, and quotations have been stabilized.
SunSirs analysts believe that without a clear positive stimulus in the market, it is difficult to make a big turn and focus on the increase and decrease of supply and demand. Domestic collection and storage have a certain supporting effect on cotton prices. Relative enterprises are more cautious in production and market consumption is tightening. It is expected that low fluctuations in cotton prices are normal.
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