After the Spring Festival, domestic cotton prices rose due to the strong push of US cotton and Indian cotton. As the sale of reserves approaches, the spot price has stopped rising, and the main contract of Zheng cotton has fallen from a high of 16,200 yuan/ton, and last week fell below the important support level of 15,800 yuan/ton.
Data show that as of the end of January, the national cotton industry inventory was 645,600 tons, an increase of 201,000 tons, or 45.1%, compared with the same period last year; commercial stocks were 2.678 million tons, an increase of 338,000 tons, or 14.4%, compared with the same period last year.
Even though cotton stocks rose sharply, boosted by the external market, the 3128B cotton price index quickly rose by 200 yuan/ton after the Spring Festival, and then oscillated higher until mid-February. After the Lantern Festival, downstream textile companies began to start operations one after another, and cotton demand was gradually released. It is expected that there will be replenishment in late February.
Affected by the dumping of reserves in March, Xinjiang cotton sales have accelerated significantly this year. As of mid-February, the overall sales progress of Xinjiang cotton was 70%. Among them, the sales progress of the Corps exceeds 80%, and it is mainly high-quality cotton. At present, the sales price of cotton varies: manufacturers holding low- and medium-quality cotton are eager to liquidate their inventory before selling off stocks, and there are many “hidden promises” of profit concessions; manufacturers holding high-quality cotton are reluctant to sell. Even selling at a higher price. It is foreseeable that the supply of high-quality cotton will be tight in the later market.
Last week, some industry insiders conducted research in Hebei Province. Whether they were cotton processing companies, traders or downstream textile companies, they were all very interested in reserve cotton at the lowest price. The time for cotton reserve rotation is getting closer and closer. According to this year’s reserve price calculation method, what is the price of reserve cotton rotation?
Relevant professionals said that after March, the focus of the market will still be on the reserve cotton auction floor price, transaction price, transaction quantity and warehouse delivery situation. According to the current cotton price situation in domestic and foreign markets, the reserve cotton reserve floor price calculated in early February was 15,300. The lowest price last year was around 13,000 yuan/ton. At present, cotton prices at home and abroad are still changing. When the reserve cotton is released, the lowest price may remain at around 15,000 yuan/ton.
Compared with the lowest prices predicted by market professionals, the price of new cotton in 2016 is not very competitive, especially for some low-quality cotton. Hebei textile enterprises said that the current price of local real estate cotton is around 15,500 yuan/ton. Due to quality reasons, most manufacturers have little interest in it. Although the quality of Xinjiang cotton was excellent in 2016, the price was relatively high. The transaction price of Xinjiang cotton was already 16,500 yuan/ton. If the reserve cotton is given a higher discount, the price will be more competitive than the 2016 new cotton.
It is understood that textile companies in Hebei Province are currently waiting to bid for cotton reserves, and the company’s raw material inventory has basically been maintained until March, when the rush to buy is inevitable. Looking back on when the reserve cotton came out in 2016, the initial bidding was fierce and the transaction rate remained high. The originally low-price reserve cotton became a hot commodity in the hands of enterprises. Although the quantity of rotation can be guaranteed this year, because the inventory of enterprises in the early stage remains low and the willingness to restock is strong, the bidding situation in the early stage of rotation is not optimistic. It is not easy for enterprises to buy low-priced reserve cotton.
There are differences in the industry regarding the price trend of reserve cotton in the later period. Some people believe that the reserve cotton is fully prepared in 2017 and there is limited room for speculation. Others believe that the destocking of reserve cotton will benefit cotton prices. However, one thing is for sure, this year’s rotation is likely not to repeat last year’s frenzied rush.
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