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At present, the market is still worried about the continuity of demand, approaching the Spring Festival, the market expects cloth factories to supplement the inventory of cotton yarn or gradually weaken, yarn turnover is weak risk, and Zheng cotton CF05 contract above 15700 or face greater hedging pressure; The enthusiasm of textile enterprises for cotton procurement is general, although the cotton yarn inventory of textile enterprises has been eliminated, but the profit of spinning is still not ideal. Zheng cotton trend or return to shock in the short term.
ICE cotton prices stabilized
Due to the global cotton consumption outlook is still not optimistic, ICE cotton prices lack of rising drive, but with China's cotton prices rebound and the United States cotton export progress is good, ICE cotton prices stabilize, the short-term will be around 80 cents/pound shock, if the United States cotton exports exceed expectations, will promote ICE cotton prices rise.
Improved short-term consumption supports a rebound in cotton prices
After a sharp decline in October and November last year, domestic cotton prices began to rebound from the beginning of December last year, and Zheng cotton main began to rise from the lowest 14,740 yuan/ton in early December, and as of January 11, 2024, 15,580 yuan/ton, an increase of 840 yuan/ton.
Recent Zheng cotton main contract market trend this round of Zheng cotton rising market is mainly driven by two factors, one Xinjiang cotton processing into the middle and late period, the cost solidified at a high level, the futures price formed a certain support. After entering December, the order situation of textile enterprises improved, cotton yarn inventory began to decline, textile enterprises continued to purchase cotton raw materials, and spot consumption improved to support cotton prices.
According to MYSTEEL data, from November 24, 2023 to January 5, 2024, the spinning mill opening probability increased from a minimum of 60.3% to 70.2%, which is the seventh consecutive week of increase. From December 8, 2023 to January 5, 2024, the weaving mill opening probability increased from a minimum of 36.9% to 46.4%, which is the sixth consecutive week of increase. From December 1, 2023 to January 5, 2024, the number of days of yarn inventory in the spinning mill fell from a maximum of 32.8 days to 27.7 days, which is the sixth consecutive week of decline.
Recently, the domestic cotton market continues to pick up, cotton spot prices remain stable, futures prices continue to rebound, textile enterprises to purchase enthusiasm, cotton yarn orders have improved, but the sustainability remains to be seen. Xinjiang picking and selling activities end, lint processing ends. As of January 4, the country has processed 5.315 million tons of lint (the national cotton market monitoring system predicted domestic cotton production of 5.657 million tons in November 2023), an increase of 643,000 tons year-on-year. It can be seen from the processing progress that although the purchase progress of seed cotton in 2023 is slow, with the rapid decline of cotton, cotton farmers' reluctance to sell, and cotton processing progress quickly rebounded.
At the same time, due to the continuous downward trend of the market, cotton enterprises are reluctant to sell, and the willingness to save cotton and gamble on the future market is reduced, and the strategy of fast processing and fast sales is basically adopted. At present, with the continuous rebound of cotton prices, cotton companies set a rapid increase in the amount of protection, enterprises remain cautious about the future market, once the futures price reaches or exceeds the cost of cotton processing, enterprises will actively enter the market to participate in hedging, which also shows that the above high pressure is very high, the higher the price, the greater the number of cotton hedging.
Of course, according to the experience of previous years, unless there is a big market in 2024, the capital will certainly not give cotton enterprises the opportunity to smoothly unhitch.
The downstream textile industry is picking up
The downstream textile industry ushered in a rebound, business orders are better than before December, especially foreign orders, which cannot be separated from Christmas, New Year's Day and other holiday effects driven, Zheng cotton also took advantage of the spot sales improvement rose a wave. Entering January, the market will gradually enter the off-season, in addition to the price support generated by expected replenishment, orders will enter the off-season. How much impact this has on Zheng cotton needs to be observed, but from the perspective of the big trend, in the atmosphere of the entire commodity correction, Zheng cotton is only a rebound trend at present.
Individual mills said orders have been received in May
The domestic cotton yarn price is stable and small, the finished product inventory of textile enterprises has declined significantly, the inventory pressure is reduced to promote the recovery of the cotton mill and the replenishment of raw materials, and then the recent cotton spot transaction is relatively good. At present, the short-term cotton yarn market continues to improve, especially 40 to 60 medium and high count yarn, and individual mills said that they have received May.
However, the cotton mill believes that the current cloth factory has been near the end of the year stock, and whether the market can continue after the year is not optimistic, so the overall try to go to the warehouse as much as possible, and the raw material procurement is cautious. Some cotton textile enterprises that had planned to release the "Spring Festival holiday" in mid-January issued a notice to postpone the holiday by 7-15 days. The quotation of imported yarn outer plate also continued to rise, and the "carry-over" market of cotton textile continued.
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