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SunSirs: Both Domestic and Foreign Cotton Prices Have Risen, Cautious about this Surge
June 05 2020 09:13:26SunSirs(Linda)

According to SunSirs data statistics, as of June 3, the average Chinese lint cotton spot market price was reported at 11,913 yuan/ton, up 45 yuan/ton from last Wednesday, an increase of 0.37%, and a year-on-year decrease of 18.06%. Locusts have swept back on the eve of cotton planting in India, and the progress of extermination has attracted attention. Good news, such as the gradual resumption of production and recovery of cotton-using companies, boosted the growth of foreign cotton in the ICE period, but most buyers in cotton-consuming countries entered a wait-and-see state. It still takes time for the recovery of the consumer side. The fundamentals of short-term supply exceeding demand have not changed. The main force of ICE cotton has risen to about 60 cents. It is difficult for Zhengzhou cotton to rise from 11,400 yuan/ton to 11,800 yuan/ton in two days, but later, it was weak, and the shock adjustment was the main one. The covid-19 situation and supply-demand issues have not been completely resolved, and the market is chasing after rising.

The Indian locusts are coming again, inducing the rise in cotton prices. The cotton production in India accounts for about 20% of the global cotton production. The market is worried that the cotton production will be greatly reduced due to the locust disaster. As early as February of this year, news of the outbreak of desert locusts invading Southwest Asia helped Zhengzhou cotton set a daily limit. Earlier the market worried that the locust disaster would also be encountered in China, but some analysts believe that the possibility of this locust leap to China is very small, and India has quickly controlled the situation, which has played a warning role in cotton planting in China Preventive injections should be done in work. At the end of May, India suffered another locust plague. The Cotton Institute of India (CAI) stated that cotton planting in northern India was 80% complete, and cotton planting in central and southern India will begin in the first week of June. Therefore, the output of cotton has not reached the point of absolute harvest. In fact, most of the planting has not yet been carried out. And India is stepping up efforts to curb locust infestations, ensuring that locust plagues are contained before planting increases in the summer.

The volume of U.S. cotton export contracts has been further reduced, the market has chosen to ignore it, and the weather is more important. According to the report of the US Department of Agriculture, from May 15-21, 2020, the net contracted amount of U.S. upland cotton for 2019/20 was 10,100 tons, a 65% decrease from the previous week and an 85% decrease from the average of the previous four weeks. The number of newly signed contracts in China decreased from 34,800 tons to 13,300 tons, a decrease of 61.78%. At this time, the market is more concerned about the weathe.

According to the June global production and demand forecast released by ICAC, the global cotton consumption in 2019/20 is expected to be 23 million tons, a year-on-year decrease of 11.3%. Production is expected to be 26.2 million tons, up 2% year-on-year. The ending inventory is expected to increase to 21.75 million tons, the highest in the past five years. In addition, due to high inventories, declining consumption and high output, international cotton prices will continue to be under pressure next year. The reason is that everyone knows that demand is low, supply is sufficient, and cotton does not have the strength to soar. There are still some days to recover from the CODIV19, and the reduction in production seems to be a necessary condition for rising cotton prices.

Cotton yarn continues to be under pressure, and the price advantage of India and Pakistan yarn is outstanding. According to the statistics of SunSirs, the average price of cotton yarn for 32S ring spinning and knitting in Shandong reported 20,875 yuan/ton, down 375 yuan/ton from last Wednesday, or 1.76%. Last week, the prices of domestic and foreign cotton yarns continued to decrease, and the biggest decline was that the 32S cotton yarns in India fell weekly by 126 yuan/ton, and imported yarns were lower than domestic yarns by 200-750 yuan/ton. . The yarn cotton price gap narrowed by 93 yuan/ton, and the yarn profit decreased further.

SunSirs analysts believe that India is working hard to solve the locust problem, even if production is reduced, social stocks can support. Although the factory is slowly recovering, demand recovery also requires a process, and the cotton price repair process will not be abrupt, and the stagnation of cotton prices has also verified the rationality of the market. The output of printed cotton has not yet been finalized, and it has been a long time to solve the locusts. The weather problem is not a problem, and cotton prices tend to be cautious.

If you have any questions, please feel free to contact SunSirs with support@sunsirs.com.

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