The employment situation in the United States has improved and the Fed’s interest rate meeting is approaching
Cotton prices will continue to rebound ?
——China Cotton Market Weekly Report (May 30-June 4, 2021)
This week, domestic cotton prices rose slightly, and international cotton prices rose slightly; domestic cotton yarn showed signs of rising again after a slight decline, and international cotton yarn prices continued to rise; polyester staple fiber prices stopped falling and rebounded.
1. Domestic cotton prices rose slightly
This week, the domestic cotton market ran smoothly , the spot trading volume of Xinjiang lint cotton has increased, and domestic cotton prices have experienced a technical rebound after a period of decline. From May 30 to June 4, 2021, the average settlement price of the main cotton futures contract on the Zhengzhou Commodity Exchange was 15,631 yuan/ton, an increase of 19 yuan/ton or 0.1% from the previous week; representing the market price of standard grade lint cotton in the Mainland The average price of the national cotton price B index was 15,794 yuan/ton, an increase of 25 yuan/ton or 0.2% from the previous week.
2. International cotton prices rose slightly
This week, the United States increased its price by 60,000 yuan. Supported by the US$100 million stimulus package, international cotton prices rebounded after showing obvious resilience. From May 30 to June 4, 2021, the average settlement price of the main contract of Intercontinental Exchange Cotton Futures (ICE) was 84.05 cents/pound, an increase of 1.51 cents/pound or 1.8% from the previous week; representing imported cotton from China The average international cotton index (M) price of the main port CIF price is 93.42 cents/pound, an increase of 2.22 cents/pound or 2.4% from the previous week. The import cost is 15,005 yuan/ton (calculated based on 1% tariff). Including port miscellaneous goods and freight), it increased by 207 yuan/ton, or 1.4%, from the previous week. The international cotton price was 789 yuan/ton lower than the domestic cotton price, and the internal and external price difference narrowed by 182 yuan/ton compared with last week.
3. Domestic cotton yarn prices rose slightly after a slight drop, while international cotton yarn prices continued to rise slightly
This week, the wait-and-see sentiment in the domestic pure cotton yarn market has become stronger. Orders from large textile mills are relatively stable, and the price of finished products is slightly higher. Small and medium-sized mills mainly sell short orders at a profit. As cotton prices stop falling and rebound, the overall pure cotton yarn price shows There are signs of price increases again after a slight decline; after India, the epidemic in Vietnam has fermented again, and textile production and shipments in Southeast Asia have been further restricted, supporting the continuous increase in quotations for foreign yarns; the current price of conventional foreign yarns is 217 yuan/ton higher than that of domestic yarns. The downstream gray fabric market is generally stable. Regular gray fabrics are dominated by small and medium-sized orders. Price competition for some varieties is fierce, making it difficult to receive orders. The overall profit margin is average.
4. Market outlook
The employment situation in the United States has improved, the Fed’s easing policy tone is still difficult to change in the short term, the epidemic has exacerbated the divergence in the performance of various countries’ industrial chains, and international cotton prices continue to adjust. The number of private jobs in the United States increased by 978,000 in May, the largest increase in 11 months, indicating that labor market conditions are improving. The U.S. dollar index rose rapidly, but the Federal Reserve did not send a signal to take tightening action, and market doubts and concerns remain. heat up. In the international cotton market, U.S. cotton sowing progress has accelerated. As of May 30, U.S. cotton sowing progress was 64%, the same as the same period last year. The southwest monsoon is coming this week in India. Judging from the fact that the sales of cotton seeds in India have not dropped, the epidemic has no impact on the epidemic sowing. The current operating rate of the garment export distribution center in New Delhi, India has dropped to 40-50%, and about 20% of the orders have been delayed or transferred. Bangladesh, Sri Lanka and other countries; after India, the spread of the epidemic in Vietnam has caused serious disruptions in the textile industry supply chain. Terminal consumption in the United States and Europe is continuing to recover. In the week of May 22, Red Book commercial retail sales rose slightly to 13.6% year-on-year. In May, the Eurozone consumer confidence index narrowed to -5.1, from the previous value of -8.1. To sum up, the global epidemic situation is volatile, the activity level of cotton industry chain activities in various countries is still highly differentiated, the United States continues to ignore inflation and continues to increase liquidity supply, the international cotton market continues to adjust at a high level, and there is the risk of continued instability.
The economy shows strong production and weak demand, and cotton prices lack the motivation to rise significantly. The impact of rising raw material prices in May was reflected. The production side performed better than the demand side, and companies of different sizes performed differently. According to data from the National Bureau of Statistics, the PMI production index in May was 52.7%, 0.5 percentage points higher than the previous month. The new orders index was 51.3%, 0.7 percentage points lower than the previous month. The PMI of large and medium-sized enterprises was 51.8% and 51.1% respectively, which was 0.1 and 0.8 percentage points higher than the previous month. The PMI of small enterprises was 48.8%, 2.0% lower than the previous month. percentage points, falling to the contraction range. In the domestic cotton market, after cotton sowing in southern Xinjiang, cotton seedlings grew about a week later than in previous years. With the recent increase in temperature, some cotton has budded. Later weather changes are crucial to new cotton production; the spot market supply is still abundant. , imported cotton stocks continue to increase. The market expects that domestic imported cotton stocks have risen to more than 750,000 tons. This week, the total cotton stocks in Zhangjiagang continued to rise to 92,000 tons, an increase of 2.2% compared with last week. Cotton companies may be more willing to reduce inventory. At present, textile factories above designated size are basically receiving and arranging orders normally, and spinning profits are still relatively high. At the same time, as the epidemic in Vietnam and other countries worsens, the expectation of orders returning to China is also increasing. Recently, downstream terminal purchases of weaving, fabrics and clothing have slowed down. The epidemic has caused the Guangzhou Clothing Wholesale Market to suspend operations, and market activity has been affected.Affected by the epidemic, stocks of cotton yarn, gray fabrics and other items in coastal areas may rise in the short term. To sum up, the domestic cotton supply is relatively abundant, and the lower reaches of the industrial chain are “unevenly hot and cold”. However, the market’s bullish sentiment is still strong. In view of the fact that the country has repeatedly proposed to ensure the supply and stable price of bulk commodities, and has sufficient macro-control policies Tools have been used to solve outstanding problems in economic operations such as rising commodity prices, and the actual motivation for the sharp rise in domestic cotton prices has weakened.
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