Cotton prices have fallen

    Entering October, the strong cotton prices began to turn downward. The pressure of new cotton harvest and changes in market expectations, as well as the continuous rotation of reserve cotton in October and the lack of improvement in downstream demand, have led to a continuous weakening of cotton prices. The continuous decline in cotton prices has also led to a decrease in the purchase price of seed cotton this year.

    Compared to the same period in previous years, the acquisition market this year is slightly deserted. Apart from a slight delay in harvesting time, there are still differences between buyers and sellers regarding the acquisition price. Cotton farmers have high expectations for the acquisition price. However, the "pain" of 2021 and the current tepid downstream consumer market have forced cotton acquisition companies to act cautiously. When can the deadlock in Xinjiang seed cotton acquisition be broken? What is the future trend of cotton prices?

    Cotton prices continue to decline

    Recently, due to multiple factors such as large-scale picking of Xinjiang seed cotton and weakened downstream consumption, domestic cotton prices have further declined. According to data from China Cotton Network, from October 16th to 20th, market sentiment was pessimistic, with Zheng Cotton futures prices dropping from the 17000 yuan/ton mark to the 16000 yuan/ton mark, down about 1000 yuan/ton. The average settlement price of the main contract of Zhengzhou cotton futures is 16630 yuan/ton, a decrease of 549 yuan/ton or 3.2% compared to the previous week; The national cotton price B index, which represents the market price of standard grade lint in the mainland, has an average price of 17860 yuan/ton, a decrease of 244 yuan/ton or 1.3% compared to the previous week.

    Picture of Jinnong Huiye: Xinjiang Cotton Field

    At the same time, the procurement of raw materials by textile enterprises has decreased, and the enthusiasm of enterprises to bid for reserve cotton has ceased. During the week from October 16th to 20th, the transaction rate of reserve cotton was around 40.6%, with an average transaction price of 17109.37 yuan/ton, a decrease of 321.85 yuan/ton compared to the previous week; The price of standard grade (3128) cotton is 17598.25 yuan/ton, a decrease of 304.37 yuan/ton; The average markup is 141.25 yuan/ton, down 154.37 yuan/ton.

    Not only domestic cotton prices, but also international cotton prices continue to decline. The recent progress of new cotton harvest in the United States has been smooth, and the speculation on the supply side has subsided. The pressure of shrinking demand has emerged, and international cotton prices continue to decline. On October 16-20, the average settlement price of the main cotton futures contracts in New York was 84.22 cents per pound, a decrease of 1.47 cents per pound or 1.7% compared to the previous week; The international cotton index (M), which represents the average CIF price of imported cotton in China's main port, has an average price of 96.44 cents per pound, a decrease of 0.92 cents per pound or 0.9% compared to the previous week; The equivalent import cost in RMB is 16790 yuan/ton, a decrease of 159 yuan/ton or 0.9% compared to the previous week.