Market Analysis: The Truth Behind The Price Of Cotton

Recently, zhengmian has been strongly supported at Wanwu pass, which is closely related to the strong demand of downstream. Although the epidemic situation at home and abroad is still spreading, the production and sales of textile enterprises after the third quarter of 2020 is indeed a major industry highlight. In the short term, we need to pay attention to the contradiction between supply and demand in order to prevent cotton price fluctuations.

Close to the Spring Festival, in order to strengthen the epidemic prevention and control, all localities have taken strict prevention and control measures, which will have an impact on the export of cotton in Xinjiang in the short term. In the case of strong demand, the contradiction between supply and demand of cotton has temporarily changed. Since mid January, due to the needs of epidemic prevention and control, the requirements of Xinjiang cotton freight transportation have become more stringent than in the previous period, and the volume of vehicles transported out of Xinjiang has decreased slightly. In addition, as the Spring Festival approaches, the willingness of vehicles in Xinjiang to leave Xinjiang before the Festival is low, and some mainland "return vehicles" return to Xinjiang ahead of schedule, leading to a significant drop in road transport capacity.

A trader in Shandong said that the production and sales of textile enterprises are booming, and the inventory of raw materials is maintained at about one month, and the inventory of a few enterprises is maintained at 2-3 months. Cotton yarn orders are arranged to march to April, and the product inventory is significantly lower than that of the same period last year. Due to the limitation of transportation capacity in Xinjiang, enterprises can only purchase lint resources from inland warehouses. For enterprises with low raw material inventory, raw material procurement is more urgent, but the market lint resources are sufficient, and this contradiction is not prominent for the time being.

The trader said that the domestic and foreign sales orders of Shandong customers are very good, especially the demand for combed yarn above 60s is in short supply, and the product profit is high. It is expected that some enterprises will not arrange holidays for the Spring Festival this year to rush customers' orders. The textile enterprises in Heze area of Shandong Province are mainly local employees, so the impact of the epidemic on the rework after the festival can be ignored. Now the standard lint price is stable at 15500-15600 yuan / ton, higher than the futures price, there is no downward momentum in the short term, the downstream demand is very good, and the disk support is very strong. Especially before the Spring Festival in the textile production peak season, cotton prices fall more difficult.

It is understood that when the global manufacturing industry is suffering, textile enterprises have ushered in a rare golden development opportunity. According to the latest statistics of the General Administration of Customs of China, from January to December 2020, the cumulative export volume of China's textiles and clothing was 2912217.7 billion US dollars, with a year-on-year increase of 9.58%. Among them, the cumulative export volume of textiles was 153.839.4 billion US dollars, with a year-on-year increase of 29.24%. Therefore, in the context of sustained domestic and external demand, professionals believe that cotton prices are easy to rise but difficult to fall.