Late Cotton Price Pressure Big Cotton Business Acquisition Need Caution

It is understood that since October, the purchase price of hand picked cotton in southern Xinjiang was first suppressed and then raised. The selling price of 40% lint seed cotton increased from 5.4-5.5 yuan / kg to 5.70-5.80 yuan / kg. The purchase price of machine picked cotton in Northern Xinjiang is lower than that in the north of Tacheng. The lowest purchase price of the 38% garment sorting machine is 4.2-4.3 yuan / kg, and the purchase price of 40% lint seed cotton has risen to 4.9-5.0 yuan / kg in Kuitun, Shihezi and Changji.

Thanks to the substantial progress made in Sino US trade negotiations and the continuous rise of Zheng cotton, some cotton ginning plants with abundant funds and unblocked spot sales channels have not only opened up acquisitions, but also raised high quality seed cotton resources in price hike and promoted the continuous increase in the cost of lint. Cotton farmers reluctant to sell emotions are also warming up. When the goods are sold, the goods are more popular than the three ones.

According to the calculation of the 40% linen purchase price 4.9 yuan / kg and cottonseed 1.7 yuan / kg, the comprehensive cost of the 3128/3129 entry supervision library is about 11500 yuan / ton (including short turnover, warehouse "lump sum cost", and monthly financial cost). If the current CF2001 contract is hedging without considering the premium, the net profit of the ginning factory is 500 yuan / ton (four months' financial cost is deducted). Once the 40% lint seed cotton purchase price reaches 5.2 yuan / kg, the comprehensive cost of the machine picking cotton warehouse receipt is about 12200 yuan / ton, and only the main contract price is 12500 yuan / ton or more. Obviously, with the acquisition price of machine picked seed cotton broken 5 yuan / kg, the space of hedging profit of the cotton ginning plant is narrowing.

Although reached the first stage agreement, from the results of the negotiations, the actual situation is far from optimistic as the industry expects. Two, cotton prices are basically in the top and bottom down under the adverse effects of high carrying commodity cotton stocks, continuous decline in cotton consumption and year-on-year growth in cotton production in 2019/20. The three is whether cotton mill or cotton traders, short-term processing and purchasing cotton are mainly hedging. It is estimated that after October, zhengmian warehouse receipts will continue to grow rapidly, and there will be no doubt about the new high historical record. (2018/19 warehouse receipts + effective forecast of the highest 920 thousand tons), so the price of zhengmian disk will be close to the spot and even the reverse probability with the spot. Cotton processing enterprises should be careful to rush to harvest seed cotton and control costs. There are three reasons for this: first, China and the United States.