Poor performance in new orders, cotton market fluctuates slightly
This week, the cotton market first fell and then rose, with slight fluctuations. According to the commodity market analysis system, the spot price of 3128B grade cotton on March 11th was 17238 yuan/ton, an increase of 0.34% from last week.
Domestic aspect: The fluctuation of domestic cotton prices is relatively small. The reduction in production in Xinjiang is smaller than expected, coupled with a large amount of imported cotton, the commercial inventory of cotton has remained high year-on-year. As of the end of February, the commercial inventory of cotton will drop to 5.23 million tons, and the inverted range of internal and external price differences has narrowed. The import cotton port inventory continues to grow, and the short-term supply is still relatively abundant. According to the national cotton trading market, as of March 10, 2023/2024, the cumulative processing of Xinjiang cotton was 5.5546 million tons.
Picture of Jinnong Huiye: Cotton Fields in Xinjiang
The overall situation of the domestic textile industry is relatively stable, with a rebound in operating rates and relatively low inventory pressure, which has supported cotton prices. However, downstream raw material replenishment and low acceptance of high cotton prices have led to a continued decline in pure cotton yarn prices. At present, the downstream is cautious about this, and the situation of new orders is still not ideal, and the confidence of textile enterprises is insufficient.
International aspect: International cotton prices have started to experience a deep decline after a significant increase, despite the latest supply and demand forecast report from the US Department of Agriculture showing a significant reduction in US cotton production this year and a significant year-on-year increase in export progress, which has sparked speculation in the market about tight US cotton inventories. But with the rapid rise in US cotton prices in recent times, downstream resistance is greater, and the market's wait-and-see sentiment is becoming stronger. As of March 8th, the settlement price of the ICE cotton futures main contract was 95.28 cents, a decrease of 0.29 cents from last week. From the perspective of cotton supply and demand situation, the international market cotton supply and demand will be basically balanced in 2023/24.
According to the March supply and demand forecast report released by the US Department of Agriculture, the estimated global cotton production was 24.593 million tons, an increase of 28000 tons compared to the previous month. This is mainly due to India's increase of 109000 tons, while the US cotton continued to decline to 2.634 million tons compared to the previous month. The expected global consumption is 24.591 million tons, an increase of 105000 tons compared to the previous month. The global cotton final inventory was 18.146 million tons, a decrease of 77000 tons compared to the previous period. Among them, only China's ending inventory increased by 87000 tons to 8.764 million tons month on month. Overall, the global cotton supply and demand pattern has tightened compared to the previous month.
Market forecast: Currently, March should have been the traditional peak season in the textile industry, but the transaction volume in the pure cotton yarn market has not improved significantly. The downstream market still maintains a calm atmosphere. Due to the delayed issuance of new orders, enterprises have a pessimistic view of the future market, while the supply side still maintains a loose pattern. There is significant pressure on cotton prices in the short term, and it is expected that cotton prices will maintain a weak and volatile trend in the short term.
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