According to the survey, as the main ICE contract fell below 77 cents/pound and 75 cents/pound this week and the market price of Zheng cotton CF1205 contract retested 14,700 yuan/ton, 14,600 yuan/ton and other integer marks, foreign cotton Regardless of the US dollar quotations for ship cargo, bonded cotton or port clearance cotton quotations, all have been reduced. However, the basis differences of US cotton, Brazilian cotton, Australian cotton, and West African cotton have continued to stabilize, and traders are not willing to adjust.
Cotton companies in Qingdao, Zhangjiagang and other places said that the high levels of ICE and Zheng cotton have fallen, stimulating a slight rebound in shipping schedules, port spot foreign cotton inquiries and shipments in December/January. Brazilian cotton and US cotton are still market transactions in 2020 The “protagonist”, while African cotton, Indian cotton, Australian cotton, etc. have always played a “supporting role”, while Greek and Spanish cotton, Central Asian cotton, etc. have been “players” (shipping schedule in January/February/March).
Judging from the quotations of some foreign investors and cotton trading companies, the price of Australian cotton in 2020 for the December/January/February shipping date is very scarce, and the basis difference of SM 1-5/32 is stable at 15-15.5 cents/pound, 31- The basis difference of 3/21-3 37/38/39 (breakage ratio strength 31/32GPT) is still 16-16.75 cents/pound; while in the same shipping period, US cotton SM (or 21-3) 1-5/32 ( or 37), the basis difference is 12-12.5 cents/pound, which is lower than Australian cotton’s 2.5-3.5 cents/pound; the Brazilian basis difference for the December/January shipping date SM 1-5/32 (strong 28/29GPT) is about 9-9.5 cents/pound, lower than Australian cotton 5.5-6.5 cents/pound.
Some international cotton merchants believe that the current price difference between Australian cotton and cotton from other origins has been relatively low in recent years, because Australian cotton has obvious quality premiums and premiums compared to American cotton and Brazilian cotton. The difference is generally 6-9 cents/pound higher than that of US cotton and 10-13 cents/pound higher than that of Brazilian cotton. It is obviously not reached at present. On the one hand, it is affected by the outbreak of the new crown epidemic in 2020, loss of control and mutation, etc. China and other major textile countries’ exports of high-quality and high-end clothing products to European and American countries have declined significantly, and consumer demand for Australian cotton continues to be sluggish. On the other hand, the continued deterioration of China-Australia relations has restricted Australian cotton imports.
Some cotton traders and textile companies believe that if Sino-US relations ease and a win-win model of cooperation is resumed after Biden takes office, then Sino-Australian relations will gradually break the ice, and Australian cotton exports to China are expected to accelerate. The basis may rise to 16-19 cents/lb; if Biden continues the Trump administration’s attitude and policies towards China, the Australian cotton basis will fall back to 12-15 cents/lb, one step closer to the price difference with US cotton. Quality advantages and price premiums cannot be reflected through downsizing or even phased “integration”.
The Australian Cotton Association predicts that Australian cotton production is expected to rebound to 2.1 million bales in 2020/21 (the output in 2019/20 is only 600,000 bales), plus about 450,000 bales of carry-over inventory, so the pressure on Australian cotton exports has not increased. Not low. </p
