What Are The Factors That Support The Sharp Rise In The Spot Price Of Lint?

Recently, domestic lint spot prices continued to rise.

In July 26th, some cotton enterprises in Hebei and Shandong produced a price of 14500-16000 yuan / ton of lint, which was 700-1200 yuan / ton higher than that in mid July.

The author believes that there are mainly the following factors to support the sharp rise in the spot price of lint.

Cotton enterprises are shutting down gradually, with limited supply.

The current seed cotton market acquisition has basically ended, prices have been rising, cotton processing enthusiasm is not high, continue to choose stop and stop production, market lint supply is limited, cotton enterprises have no inventory pressure, low sale intention is not high, still psychological.

The daily volume has not increased.

At present, the sale of cotton reserves is still hot. As of July 25th, the total turnover of cotton reserves was 1507069.49 tons, and the total volume of imported cotton was 296306.06 tons, with a turnover rate of 98.16%. The total turnover of domestic cotton was 1210763.43 tons, with a turnover rate of 98.30%.

This week (July 25-29), the selling price was 14376 yuan / ton (standard class), up 767 yuan / ton compared with last week.

At present, the turnover rate and paction price of cotton reserves remain high. But after traders took part in the auction this year, part of the reserve cotton formed a commercial stock and did not flow to the market, making it short term.

There is a shortage of supply to support the market lint market.

Cotton imports continued to decline.

According to the statistics of the General Administration of customs, China imported 72 thousand tons of cotton in June 2016, a decrease of 6 thousand tons, a decrease of 7.7%, a decrease of 89 thousand tons and a decrease of 54.6% compared with the same period of last year. In 2016, the total import of cotton 431 thousand tons in 2016, a decrease of 503 thousand tons, a decrease of 53.8%.

Cotton imports continued to decline, adding positive benefits to the market lint.

The above factors support the increase in spot price of lint this week, but there are still some factors that inhibit the rise of cotton prices.

Futures prices fall.

Cotton rises because of the US dollar.

After the overbought cotton market was revised, the US cotton fell this week. As of last Friday (22), the ICE cotton contract in December closed at 72.68 cents per pound, down 1.6 cents from the same period last week.

Zheng cotton also fell sharply. On the 25 day, Zheng cotton CF1701 contract closed at 15340 yuan / ton, down 250 yuan / ton compared with last Friday, and the stagflation of futures prices fell sharply, which is not conducive to the spot market of lint.

Textile market entered the traditional off-season.

At present, the textile and garment market has entered the traditional off-season, and the downstream orders have not been substantially increased. Basically, the goods are mainly ordered by the previous orders, and the prices of some yarn are reduced by the spinning enterprises, so as to promote sales. Some textile enterprises are pessimistic about the market outlook, and the enthusiasm for purchasing lint is not high, and the market wait-and-see psychology is enhanced.

On the whole, I believe that the limited cotton resources in the spot market are strong support for cotton prices. Although the futures market callback and the textile market have been inhibited in the traditional off-season for the rise in cotton prices, the textile enterprises must always meet the cotton demand at present. If the policy does not change, the cotton price will still be stable or strong in the future.