SunSirs: Cotton Prices Weakening Amid Volatility, Downstream Demand Relatively Stable

According to China Cotton Network, Zhengzhou cotton futures fluctuated weakly last week (November 10-14), with prices trending lower.

According to the USDA's November supply and demand forecast, global cotton production, consumption, trade volume, and ending stocks all increased compared to September. Specifically, global cotton production was revised upward by 2.4 million bales, consumption by 50,000 bales, and ending stocks rose by approximately 2.8 million bales to 75.9 million bales. Notably, U.S. cotton production and ending stocks saw substantial upward revisions, resulting in a bearish report that drove ICE U.S. cotton prices lower.

This year, Xinjiang cotton production faced multiple setbacks. During the boll development stage, growth was robust, leading to widespread market expectations that new cotton yields would exceed last year's levels. Combined with increased planting area, cotton output was anticipated to be significantly higher than the previous year. However, after cotton maturity, initial harvesting conditions suggested actual production might fall short of expectations, triggering a rebound in cotton prices. Recently, with harvesting largely completed, actual cotton output has recovered somewhat. Last week's pullback in cotton futures prices reflects this adjustment.

Compared to other commodities, cotton has shown relative resilience against price declines. While many commodities have hit decade-low prices, cotton has remained stable above 13,000 RMB per ton. Despite increased production and the cotton spinning industry being in its off-season, downstream demand has remained relatively stable, providing strong support for cotton prices. The Xinjiang cotton basis remained around 1,000 RMB per ton that week, indicating firm spot prices also underpinned by demand.

Traders report that Xinjiang cotton yarn sales outperform those in inland regions, leading to significantly stronger raw material demand. Enterprises are making larger single-purchase volumes of cotton. Inland cotton yarn production and sales lag behind Xinjiang, maintaining only essential raw material procurement.

Nevertheless, the current reality is that the cotton textile industry is experiencing an unusually active off-season, which has provided some support for cotton prices. Future developments will require close attention to shifts in demand.

As an integrated internet platform providing benchmark prices, on November 21, the benchmark price of cotton lint from SunSirs was 14,792.33 RMB/ton, a decrease of 0.45% compared with the beginning of the month (14,858.50 RMB/ton).

Application of SunSirs Benchmark Pricing：

Traders can price spot and contract transactions based on the pricing principle of agreed markup and pricing formula (Transaction price=SunSirs price + Markup).

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