Cotton Price Rises Strongly! Obvious Disturbance To All Parties

Since September, the second outbreak of overseas epidemic has cast a shadow on the economic prospects. Global liquidity is abundant, financial market sentiment fluctuates greatly, and the focus of commodity market has shifted upward. In China, the purchase price of seed cotton has been rising all the way, the harvest progress of new cotton has been accelerated, and the stage of new cotton scale listing has arrived, and the sustainability of downstream demand is still unclear. Various factors in the market are misplaced and changeable. This issue of the monthly report will be discussed.

Strong rise in domestic cotton prices

In September, new flowers are about to be listed, and the news that the downstream is relatively weak and the US ban on Xinjiang cotton suddenly comes, and the market is pessimistic again. On September 9, Zheng Mian dropped from nearly 13000 yuan / ton to 12215 yuan / ton. Subsequently, yarn prices stabilized. On September 14, the U.S. government temporarily shelved the comprehensive ban on cotton products in Xinjiang, and domestic cotton prices resumed their upward trend. During the National Day holiday, the external disk rose strongly, and the purchase price of Xinjiang seed cotton rose rapidly. Cotton price rose by 14000 yuan in December, pushing domestic cotton price up a lot.

According to the data center of the national cotton market monitoring system, as of October 14, 2020, the settlement price of the main contract of Zheng cotton futures was 14130 yuan / ton, up 1030 yuan / ton or 7.86% compared with the beginning of September. The national cotton price B index (representing the price of 328 grade cotton in the mainland) was 13895 yuan / ton, up 1237 yuan / ton or 9.78% compared with the beginning of September.

International cotton price fluctuates upward

Since September, the international cotton price is affected by the external environment, showing a wave like upward trend. In early September, due to the strong US dollar index and the sharp fall of crude oil prices, the international cotton price went down; in the middle of September, hurricane Sally pushed up the price of ice cotton; in the last ten days, the epidemic situation in Europe and the United States rebounded, and the international cotton price fell again; in October, the United States implemented fiscal stimulus measures again, and expected to increase. In addition, the dollar index weakened, the financial market warmed up, and hurricane delta attacked the international cotton price Strong rise.

According to the data center of the national cotton market monitoring system, as of October 14, 2020, the settlement price of the main contract of ice cotton futures was 68.93 cents / pound, up 3.53 cents / pound or 5.4% compared with the beginning of September. The average price of international cotton index (m), which represents the average CIF price of imported cotton in China's main ports, was 74.92 cents / pound, up 3.29 cents / pound, or 4.59%, or 4.59%, or 1273 yuan import costs 3 yuan / ton, up 308 yuan / ton or 2.48% from the beginning of September.

The global supply and demand of cotton is relatively loose

Although the economic performance in the second and third quarters of this year was better than expected, the new crown pneumonia epidemic hit the world economy seriously. The economy shrank significantly in 2020 and the growth expected to decline in 2021. At present, the global liquidity is extremely abundant, and the strong financial market has driven the focus of commodity market upward, which is in contrast with the real enterprises seeking development in the predicament.

Recently, China's textile and garment production orders have increased, because China has won the strategic victory of epidemic prevention, Chinese people can take the "National Day" as the "new year", increase the purchasing strength of clothing, etc., and the domestic industrial chain can operate efficiently and regain the overseas garment and home textile orders. However, it is also possible for European and American consumer markets to rush for orders ahead of time due to concerns about the Limited Logistics caused by the epidemic. This is the embodiment of the cruel competition among the downstream entities of the global cotton industry chain. But this does not change the basic reality that the global cotton supply and demand relationship is relatively loose this year.

The market keeps a certain temperature in the short term

It is worth noting that abundant funds have accelerated the temperature rise of cotton and cotton yarn market, and the price of flower and yarn has been raised frequently, which has obviously disturbed the normal business of entity enterprises. In the critical period, we should not weaken the competitive advantage of China's cotton downstream in order to pursue profits excessively. Under the premise of stable domestic policy keynote and no major risk events in the periphery, the cotton market is expected to maintain a certain temperature in the short term. However, the overseas epidemic situation is urgent, and the US presidential election in November is approaching, which coincides with the time window for a large number of new cotton products in the northern hemisphere, and the uncertain factors in the market are increasing. It is suggested that the majority of cotton related enterprises should control risks and focus on stable operation.