Considering that this year's domestic cotton production is very high, the market's expected production center is around 7.5 million tons, setting a historical high. In the continuous years of price support, cotton farmers have also suffered losses, so the willingness to deliver is relatively strong. The fourth quarter is a stage of concentrated supply release, and there is a risk of futures price falling back.

New cotton is about to be listed, and the recent trend of the main cotton futures contract, 2601, has been weak. On September 22, the closing price was reported at 13610 RMB/ton, breaking through the lower limit of the 13700~14300 RMB/ton fluctuation interval.

In terms of planting cost, there is a big difference between the cooperative and other land rent. In terms of production materials, the cost of disease and pest control and chemical fertilizer has slightly decreased, but other costs such as spraying by unmanned aerial vehicle have increased. The planting cost of self-owned land has slightly decreased, while the planting cost of rented land has been calculated as 6.0~6.2 RMB／kg of lint cotton.

The southern Xinjiang is expected to start the purchase in late September. The current price of about 13,600 RMB/ton on the futures market roughly corresponds to the starting price of 6 RMB/kg.

For the carding mill, there is a willingness to take delivery below 6.5 RMB/kg, but the phenomenon of passive removal of some processing capacity due to years of losses and lack of funds has also led to the exit. Due to the unexpected consumption in the 2024/2025 marketing year and the low import volume, the basis has been continuously rising, and traders have benefited well in this process. In the new marketing year's purchasing link, traders with certain strength participated in it, and the southern Xinjiang factory participated in the purchasing and processing. At present, the new cotton pre-sale is 1000,000 to 1.5 million tons, higher than the level of the same period last year, and the pre-sale basis is 750 to 1000 RMB/ton, higher than the 500 to 700 RMB/ton quotation of the previous year.

Considering that this year's domestic cotton production is very high, the market's expected production center is around 7.5 million tons, setting a new historical high. In the continuous years of price support, cotton farmers have also suffered losses, so the willingness to deliver is relatively strong. Overall, at present, a situation has been formed where sellers are willing to sell and buyers are willing to buy, and the game in the process of acquisition will be reduced, it is expected that the delivery will be smooth, which limits the upward height of the futures market.

According to BCO data statistics, the monthly cotton consumption in China from March to June was about 743,000 tons, the consumption in July was 694,600 tons, and the consumption in August returned to 784,200 tons. The consumption in the first half of the year was better than expected, although it fell in July, it improved marginally in August.

As we enter August, downstream inventory data has also improved. With the increase in production, the raw material inventory of the spinning industry has slightly decreased, the finished product inventory has been reduced, and the weaving factory has a rigid demand to replenish inventory. The finished products began to move because of the autumn and winter orders. Although the demand in the "Golden September and Silver October" peak season is not very active, it shows a marginal improvement.

New-season cotton is coming to the market in large quantities, accompanied by a large release of hedging demand. Considering that the remaining quota and the 200,000 tons of processing and trade quota need to be used up by the end of December, it is expected that the import of cotton will increase in the fourth quarter. The fourth quarter is a period of concentrated supply release, and there is a risk of a decline in the futures market.

Overall, the short-term futures market is supported by buying pressure from the back-point price market, the delivery market, and other buyers, but with the large supply of new cotton, the concentrated hedging pressure poses a risk of a decline in the medium term.

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