1. Price quotes
The cotton market rose sharply in July. On the 1st, the price of 3128B lint was around 16,138 yuan/ton, and on the 31st, the price was around 17,756 yuan/ton, an increase of 10.03% and a year-on-year increase of 43.88%.
2. Market analysis
Domestic: In terms of spot, China's cotton price index 3128B level market rose, the price at the beginning of the month was 16091 yuan/ton, the price at the end of the month was 17,731 yuan/ton, an increase of 1640 yuan/ton, an increase of 10.19%. National cotton stocks are decreasing month by month. As of June 30, textile companies’ inventory of cotton in the library was 844,600 tons, a decrease of 17,800 tons from the end of the previous month; the country’s total commercial cotton inventory was about 3.017 million tons, a decrease of 15.67% from the previous month. The decline in cotton inventory indicates that the operating rate of downstream textile enterprises remains high and the demand for raw materials is relatively large.
The State Reserve Cotton with a total volume of 600,000 tons in July began bidding on July 5 and is scheduled to end on September 30. As of the end of July, a total of 19,111,67,431 tons were sold, with a transaction rate of 100%, and an average transaction price of 16,784 yuan/ton. The advantages of the quality and price of reserved cotton resources have attracted the enthusiasm of enterprises to purchase for companies with tight raw material inventories, and the average price has risen sharply. In addition, 700,000 tons of cotton import quotas have also been issued, which is lower than the market's previous expectations of 2 million tons, and the quotas issued in previous years are relatively stable, and the upward risk of cotton prices is reduced.
In terms of futures, Zhengzhou Cotton's main contract has a daily settlement price of 15,890 yuan/ton and a 30-day settlement price of 17,685 yuan/ton, an increase of 1795 yuan/ton, or an increase of 11.3%. The July global production and demand forecast issued by the United States Department of Agriculture in the middle of the month indicated that the end of the global cotton stocks will be lowered by 1.6 million bales in the 2021/22 season. Global consumption is expected to continue to recover, and the global cotton inventory consumption ratio continues to decline. Therefore, after the release of the report, the US cotton closed up, and Zhengzhou Cotton's price rose accordingly.
International: USDA's July global cotton supply and demand forecast data show that the total global cotton production in 2021/22 will increase from the previous month, the consumption will increase significantly, the import and export trade volume has decreased, and the ending inventory has dropped again. The domestic cotton production in 2021/22 was 5.824 million tons, the superimposed import was 2.177 million tons, and the storage was 600,000 tons. The total cotton supply in my country was 8.601 million tons, while the current annual total demand forecasted by USDA was 8.927 million tons, maintaining a pattern of undersupply. , The ending inventory is expected to decline.
3. Downstream industry chain
As of June 2021, the total retail sales of apparel, footwear, needles, and textiles in my country reached 117.4 billion yuan, an increase of 12.8% year-on-year. Benefiting from the recovery of market demand, textile companies have received good orders, and spinning profits have continued to maintain a good state, with little operating pressure. From January to June, the yarn output was 13.558 million tons, a year-on-year increase of 17.8%. The upward support of cotton prices was obvious under the circumstances of high spinning profits. Due to the gradual increase in autumn and winter orders, the operating rate of downstream weaving enterprises in textile enterprises has increased, and enterprises are more optimistic about the market outlook, and there is a greater demand for supplementary cotton raw materials. But at the same time, under the expectation of the peak consumption season, the market's worries still exist, and the industry chain shows signs of poor price transmission. The price of grey fabrics has not been able to keep up under this background. The future cotton market will mainly depend on the demand side. It is expected that in the short term Domestic cotton prices may fluctuate forward.
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