According to statistics from SunSirs, as of February 22, the average domestic spot market price of lint was RMB 16,241/ton, an increase of 4.12% in just five days. Compared with 13,504 yuan/ton in 2020, an increase of 20.27% year-on-year. The recent rapid rise in prices is due to the improvement of the macro market atmosphere. After the epidemic in the United States is under control, the economic stimulus is expected to rebound, the price of US cotton has risen and downstream demand has boosted. Due to the positive supply and demand report in February, US cotton export sales remained strong and global cotton demand resumed, US cotton prices continued to rise. On the other hand, textile enterprises started operations earlier this year, and another round of replenishment after the Spring Festival has accelerated the demand for orders. At the same time, the prices of many textile raw materials such as polyester staple fiber, nylon and spandex in the domestic market have risen, which has contributed to the rise in cotton prices.
Internationally, the U.S. cotton production in 2020/21 will be significantly reduced. According to the latest USDA report, the U.S. cotton production this year decreased by nearly 1.08 million tons to 3.256 million tons compared with the previous year. The USDA Outlook Forum significantly increased global cotton consumption and total production in 2021/22, and also significantly reduced global cotton ending stocks. Among them, the demand for cotton in major textile countries such as China and India was raised again. The U.S. Department of Agriculture will release the official cotton planting area on March 31. Brazil's cotton planting progress is lagging behind, and production forecasts are lowered. India's cotton production is estimated to be 28.5 million bales, a year-on-year decrease of 500,000 bales, China's production of 27.5 million bales, a year-on-year decrease of 1.5 million bales, Pakistan's production of 5.8 million bales, an increase of 1.3 million bales, and West Africa's production of 5.3 million bales, an increase of 500,000 bales. .
In terms of futures, ICE cotton futures rose to the highest level in more than two and a half years. Factors such as continued improvement in demand, land competition for grain and cotton, and optimism in the external market continued to trigger speculation. On February 23, Zhengzhou Cotton's main contract 2105 opened at 16,325 yuan/ton, and settled at 16,405 yuan/ton, reaching a high of 16,500 yuan/ton. The domestic cotton market is in a stage of gradual recovery, and the downstream enthusiasm for receiving offers is not high. The main reason is that the price of cotton resources has increased significantly and the yarn companies themselves have available pre-holiday reserves. It is expected that market transactions will gradually return to normal after the Lantern Festival. In the thirteenth week of 2021 (February 22-February 26), the highest limit price for Xinjiang Cotton Wheel's bidding is 16,254 yuan/ton (standard grade 3128B), an increase of 414 yuan/ton from last week.
Downstream: Since mid-February, cotton yarns in Jiangsu, Henan, and Shandong have increased at 500-1000 yuan/ton, and high-count carded and combed cotton yarns of 50S and above have generally increased at 1,000-1300 yuan/ton. At present, domestic cotton textiles The resumption rate of factories, fabrics, and clothing companies has returned to 80-90%, and a few spinning mills have begun to inquire and purchase raw materials such as cotton and polyester staple fiber. With the arrival of domestic and foreign trade orders from March to April, there are still some contracts that need to be rushed before the holiday. Supported by the external market and fundamentals, ICE and Zhengzhou Cotton resonated, while downstream weaving and fabric companies and garment factories are expected to purchase from the end of February to early March. The quotations of cotton yarn and polyester-cotton yarn have risen sharply. The pressure of cost growth needs to be accelerated to downstream terminals.
SunSirs analysts believe that domestic cotton prices have been rising all the way in the context of multiple positives. As the peak season of the domestic textile industry's gold three silver four is coming, the market is generally optimistic about the market outlook, but it is also necessary to beware of the impact of the new crown and the pressure brought by the enthusiasm for the market to chase the rise.
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