According to feedback from cotton spinning enterprises and middlemen in Jiangsu, Shandong, Henan and other places, the prices of high-quality US cotton, Brazilian cotton and Xinjiang cotton have continued to be “upside down” at ports since early September. Traders, regardless of customs clearance or bonded cotton, The cargo basis has not been adjusted; in particular, there is a strong sentiment towards high prices or even reluctance to sell customs clearance cotton. For example, on September 7-8, the quotation range of M1-5/32 Brazilian cotton in Qingdao Port was concentrated at 19,000-19,200 yuan/ton (lower quotation 18,800 yuan/ton, higher quotation 19,300-19,400 yuan/ton); US cotton 31 -3/31-4 37/38 net weight quotation is 19,350-19,500 yuan/ton (high quotation is 19,700 yuan/ton); and currently inland warehouses in Henan, Jiangsu and other places are 3129A/B (fracture specific strength 28CN/TEX) Xinjiang Machinery Procurement The quotation price of cotton by weight is 18,700-18,900 yuan/ton. The quotations of Brazilian cotton and Xinjiang cotton of the same grade and quality are again in line, both of which are lower than US cotton by 200-500 yuan/ton.
Why do the quotations of US cotton and Brazilian cotton for port customs clearance remain high? The author believes that there are three main reasons: First, the current 1% tariff cotton import quota is very scarce. For several months in a row, the quantity of cotton cleared at the port has exceeded the quantity received. The total volume has continued to decline, and traders are eager to sell at a higher price; secondly, , supported by the price increase of Xinjiang seed cotton and the continued improvement of cotton consumption, traders have strong expectations for the domestic cotton futures price to open higher in 2021/22; again, most traders clear cotton resources in Zhengzhou Hedging (virtual hedging) was done on cotton. As the CF2201 contract price gradually recovered to 17500, 17700, 18000 and other integer marks, traders were trapped. There was no room for downward adjustments in cotton spot basis and profit margins, so they could only choose to bear it. </p
