Market Analysis: The Number Of Cotton Market Increases In Cold Winter And The Market Is Expected To Rise

With the gradual completion of cotton acquisition, the processing volume of lint cotton in Xinjiang has reached more than 5 million tons, and the commercial inventory has grown faster than in previous years. The market's expectation for the growth of domestic cotton output has increased, and the domestic cotton supply side has gradually become relaxed. In the middle of December, the demand performance of cotton market was still lower than expected, and the futures prices were hovering around the profits of processing plants; Due to the high price of seed cotton purchased by some cotton enterprises, the phenomenon of hanging down is obvious, and the wait-and-see sentiment of standing on price increases.

As of December 16, the average price of domestic 3128 lint cotton was 14821 yuan/ton, down 185 yuan/ton on a weekly basis, or 1.23%; The year-on-year decrease was 1671 yuan/ton, or 10.13%. Today, Zheng Mian futures prices fell again. Today, they closed at 13570 yuan/ton, down 125 yuan/ton, or 0.91%, showing a downward trend. Some cotton enterprises cut prices to promote, but the overall effect is poor. The downstream demand is limited, and the delivery of goods is slow. The inventory pressure of small and medium-sized textile enterprises increased, and the stock accumulation phenomenon was obvious, with a small number of orders completed in January; Some enterprises are temporarily limited or have holidays in advance.

Port Meimian M1-1/8 customs clearance RMB price is stable; At present, the price of Brazilian cotton M1-1/8 in 2024 at Qingdao Port (601298) is 16500-16600 yuan/ton, 77.2-78.2 cents/pound in US dollars; In 2023, American Cotton GC31-3-37 will quote 18350-18450 yuan/ton, 84.7-85.7 cents/pound in US dollars; In 2024, Australian cotton SM1-5/32 will be quoted at 18350-18450 yuan/ton and 86.2-87.2 cents/pound in US dollars. The decline of US agricultural export data superimposed on the strength of the US dollar and the weakness of US cotton futures. The basis difference between US cotton and Australian cotton was firm, and the import cotton market mainly purchased on demand.

As of December 16, the national average price of 32s ring spinning of pure cotton was 21850 yuan/ton. Last week, the price fell by 10 yuan/ton, or 0.06% month on month. Recently, cotton yarn futures have been adjusted for weakness between 19500-1980 yuan/ton. Today's settlement price is 19545 yuan/ton, down 310 yuan/ton from last week. The yarn market has not changed much, and it continues to be light. After the price reduction in the early stage, there is no obvious effect. The market price is severely depressed, and orders are basically subject to a single discussion. The price of C32s ring spinning in some markets is 21800-22300 yuan/ton, and that of high tension C40s is 22500-23300 yuan/ton.

As of December 12, the cotton inventory of textile enterprises in mainstream regions was 32.70 days, unchanged on a weekly basis, with a year-on-year increase of 18.05%. This week, textile enterprises maintained their early status, mainly maintaining normal inventory in the warehouse. They were cautious in purchasing raw materials, buying on the cheap, and there was no phenomenon of hoarding.

The Central Economic Work Conference said that it is necessary to increase the fiscal deficit rate and cut the reserve ratio and interest rate in due course; The meeting of the Political Bureau of the CPC Central Committee set the tone for next year's economic work and strengthened unconventional counter cyclical regulation.

National Bureau of Statistics: China's CPI rose 0.2% year-on-year in November, 0.1 percentage points lower than that of the previous month; The month on month decline was 0.6%, 0.3 percentage points higher than that of the previous month. In November, China's PPI fell 2.5% year on year, 0.4 percentage points lower than that of the previous month; The month on month increase was 0.1%, instead of a decrease of 0.1% last month.

General Administration of Customs: In the first 11 months of this year, China's total import and export value of goods trade was 39.79 trillion yuan, up 4.9% year on year, achieving a steady growth. Among them, the export was 23.04 trillion yuan, up 6.7% year on year; Imports reached 16.75 trillion yuan, up 2.4% year on year; The trade surplus was 6.29 trillion yuan.

According to the latest data from the United States Labor Office, the number of Americans who applied for unemployment benefits for the first time unexpectedly rose to 242000 in the week ended December 7, the highest level in two months, exceeding the expected 221000. This growth is not only higher than the previous value of 225000, but also indicates the potential instability of the job market.

Conclusion: At present, the domestic cotton processing volume continues to show a growth trend, and all institutions continue to raise their expectations for the growth of new cotton production. The short-term supply side will maintain a loose supply situation. The macro news is in line with market expectations, but the support given to the market is limited, and the pressure on the spot side is obvious. In terms of downstream demand, according to the latest climate forecast information, the temperature in most parts of the country this winter is expected to be higher than that in the same period of the year. Although there is periodic cold air activity, the overall trend shows that the temperature this winter is close to the same period of the year or higher. Global warming makes people more inclined to wear thin, warm clothes. The indoor temperature is generally high, and there are air conditioners and other facilities, reducing the demand for outer clothing. From the perspective of the inventory of downstream textile enterprises, it has risen recently, and the market has a strong wait-and-see atmosphere. Under the stimulation of no demand trading volume, small and medium-sized textile enterprises are forced to take leave in advance. It is expected that the domestic cotton price will continue its weak shock this week, focusing on the change of downstream demand, as well as the regulation and impact of macro news.