Judging from the quotations of some international cotton merchants and large cotton trading companies, despite the recent continuous correction of ICE futures and no signs of improvement in China-Australia relations, Chinese cotton textile companies and middlemen are still relatively cautious in signing contracts for procurement.
However, the Australian cotton basis has bottomed out since mid-November. Although the amplitude is not very large (quoted ICE2103 + basis), traders’ confidence and reluctance to sell have continued to recover.
According to the survey, the December/January shipping schedule for Qingdao Port, Zhangjiagang and other main ports on December 3-4 is 21-3/31-3 37 (strong 31-32GPT), November/December The basis for the shipping date M 1-5/32 (strong 29GPT) rose to 16-16.8 cents/pound and 14-15 cents/pound respectively. The basis for various Australian cotton varieties and grades of lint cotton was overall higher than in mid-November. 0.5-1 cents/pound, among which the basis difference of high-grade and high-quality Australian cotton such as SM 1-3/16, SM 1-7/32, and GM 1-7/32 has increased slightly.
An international cotton merchant said that in October and November, some old customers and large and medium-sized cotton textile mills mainly inquired and purchased Australian cotton in “small quantities and multiple batches”. Shipments were not smooth, and port inventories showed a small increase. Rising momentum; although the current quotations of Australian cotton for port customs clearance are relatively large and complex, the single batch quantity is relatively low (the proportion of 50-200 tons is relatively high, and includes Australian cotton in 2018, 2019, and 2020); The quantity of bonded and shipped goods is also not large. On December 4, the quotations of Qingdao Port SM 1-5/32 (strong 29GPT) were concentrated at 16,400-16,500 yuan/ton (including basis quotation).
The main reasons for the strong basis of Australian cotton are as follows: First, the basis of export competitors Brazilian cotton and US cotton has been stable and relatively strong; second, not only the total basis of cotton from India, Pakistan, and West Africa in 2020/21 The production and quality are “inadequate”, and the cotton planting area in Brazil and Central Asian countries is expected to decline sharply in 2020. Third, the color grade, strength, length and other indicators of machine-picked cotton in China’s Xinjiang in 2020/21 are weak, and Australian cotton is waiting for opportunities. and move; fourthly, the vaccine has entered the comprehensive vaccination stage and the introduction of the US government’s strong economic stimulus plan is conducive to the accelerated recovery of the global economy and cotton consumption; high-grade Australian cotton will have a large market; fifthly, Australian cotton output in 2020 is only 600,000 bales Around 450,000 bales were carried over from last year, and the total export volume is less than 1 million bales. Therefore, exporters and international cotton merchants generally feel that there is little pressure and they have sufficient confidence to support prices and resist falling prices. </p
