Global Economy: Analysis Of Global Cotton Yarn Market Trend

In 2023/24, the cotton production reduction expectation and seed cotton rush harvest expectation in Xinjiang supported the shift of the center of gravity of cotton prices in the medium and long term, and short-term attention was paid to the progress of dumping storage and sliding tax import.

The spot market is strong and the basis is high. The first week of selling and storing was 100% closed. The price difference between inner and outer yarns narrowed, the import of imported yarns increased in June, and the port inventory increased slightly.

The raw materials of textile enterprises rose, and the inventory of finished cotton yarn fell; The textile mill began to replenish raw materials, and the margin of grey cloth inventory increased slightly. The downstream is in the textile off-season, but the textile mill began to replenish cotton yarn, and the margin improved.

Global terminal consumption: the inventory of neutral American clothing and clothing fabric wholesalers declined slowly, still higher than the level of the same period. The USDA report in July showed that the global cotton consumption and trade volume in the new year increased year on year, and held a positive attitude. On the whole, the operating rate of yarn ends in Southeast Asia and China remained unchanged, the price of outer disc yarn remained stable, and the center of gravity of Vietnamese yarn moved up.

The US non farm aggregate performance in July was lower than expected. Data shows that in July, non farm employment increased by 189000, lower than expected, and the previous value was revised down from 209000 to 185000; In July, the unemployment rate recorded 3.50%, both the previous value and the expected value were 3.60%; The labor participation rate was 62.6%, which was the same as expected and the previous value.

The latest data released in June showed that the commercial inventory was 2.8969 million tons, down 595900 tons month on month, down 825300 tons year on year, the industrial inventory was 822200 tons, and the estimated consumption was 708100 tons. It is estimated that the commercial inventory of domestic cotton at the end of August will be about 1.3 million tons, lower than 400000-600000 tons in the same period.

Pay attention to the weather in August in Xinjiang. In the next one to two weeks in Xinjiang, the maximum temperature in Bazhou and Changji will exceed 35 ℃, but the high temperature weather in southern Xinjiang will ease.

The operating rate of the cloth end has improved. As of August 4, the operating load of the cotton yarn factory was 57.1%; The startup rate of cotton cloth is 57%, and the cotton yarn has declined steadily. Some small factories were forced to reduce the load due to serious loss of spinning profits, but the startup rate of cotton cloth has increased steadily.

As of August 4, the raw material inventory of the spinning mill was 27.9 days, and the finished product inventory was 19.5 days. The raw material inventory increased while the finished product inventory decreased. The cotton yarn inventory of the weaving factory was 6.7 days, and the finished cotton grey fabric inventory of the weaving factory was 31.5 days. The raw material inventory showed signs of replenishment, the finished product inventory rose slightly, and the raw material inventory was still at a low level.

The turnover of the Light Textile City has improved, exceeding the average level of the past five years as a whole.

The turnover of pure cotton yarn market improved last week, but there was obvious differentiation in terms of varieties. The turnover of high configuration C40S was better than that of other varieties, whether knitting yarn or woven yarn. The price also increased significantly, with most of the cumulative increases being about 500 yuan/ton, and the price of C32S also increased.

In the second half of the week, under the influence of macro factors, Zheng Mian experienced an obvious callback, and the transaction slowed down and the price stabilized. In terms of profit, the loss narrowed slightly, but it was still 1719.4 yuan/ton.

As of February 17, 2022, medium term: it has become an expected consensus that the cotton production in 2023/24 will be reduced (USDA will be reduced by 12%, domestic planting area will be reduced by 5%, and the output is expected to be about 5.5 million tons).

short-term:

1. The commercial inventory is at a low level in the same period, and Xinjiang's commercial inventory is at a very low level in the same period, and the gap is expected to be difficult to make up.

2. The dumping, storage and sliding tax can meet the tight demand for cotton in some markets, and track the specific transactions.

3. The order rate of "Gold Nine Silver Ten" is maintained, but it is difficult to show outstanding performance. If the order is started, it can help the cotton yarn inventory transmit to the downstream.

4. Rush to recover is still a probable event, but if the dumping time is extended to the end of September or even longer, it may affect the price height of rush to recover.

The excellent rate of American cotton declined, cotton boll setting was slower than the same period, and the excellent rate declined significantly

On July 31, the US Department of Agriculture reported that the SDA of the US Department of Agriculture announced in its weekly crop growth report that, as of the week of July 30, 2023, the excellent cotton rate in the US was 41%, 46% in the previous week and 38% in the same period last year.

As of that week, the cotton boll setting rate in the United States was 47%, 37% the previous week, 57% the same period last year, and the five-year average was 50%.

As of that week, the budding rate of American cotton was 86%, 78% the previous week, 88% the same period last year, and the five-year average was 87%.

Weather conditions in key cotton regions in the United States: The drought index in Texas continues to rise. The average temperature in Texas in the next two weeks will be 30-34 ℃, and it will cool down later. Rainfall may come in the next week to alleviate the drought. The drought degree and coverage index of Texas was 156, 211 lower than that of the previous year and 5 higher than that of the previous week.

Weekly report on American cotton export: the contract value of upland cotton is still negative, and the shipment has slightly declined. According to the report of the United States Department of Agriculture (USDA), the contract volume of American upland cotton export in 2022/23 will be - 2247 tons from July 21-27, 2023, down 47% from the previous week, significantly lower than the average level of the previous four weeks. China (1362 tons) has cancelled the contract.

In 2022/23, the export shipment volume of American upland cotton was 44174 tons, down 2% from the previous week and 13% from the average level of the previous four weeks, mainly destined for China (19976 tons).

The contracted export volume of American upland cotton in 2023/24 is 7695 tons, and the main buyer is China (4154 tons).

The harvest progress in Brazil is still slow. As of the week of July 29, the total harvest progress of Brazilian (98.5%) cotton was 28.4% (conab adjusted the data of last week, mainly in Mato Grosso, and the progress of last week was reduced to 17.6%), an increase of 10.8% month on month, and the harvest progress of Brazilian cotton is still slow.

The yarn situation in Southeast Asia, Vietnam's operating rate declined slightly, India, Pakistan's yarn operating rate rebounded. The outer disc yarn price maintains a stable, medium and strong trend, and the center of gravity of Vietnamese yarn moves upward. The average spot cost of Vietnam C32S jet recently arrived at the port is around 24300-24400 yuan/ton, and the spot order loss is around 600-700 yuan/ton; The spot cost of Indian C32S woven fabric this week to port was around 23500 yuan/ton, and the spot order profit remained around 100-200 yuan/ton; The spot cost of Pakistan Sailuofang C10S recently arrived at the port is about 21600 yuan/ton, and the spot order profit is about 400-500 yuan/ton.

The internal and external price difference of imported cotton: the import window was opened, and attention was paid to the import situation after the quota was issued. Due to the weakness of the internal market, the internal and external price difference shrank slightly, and the panel price difference was 3813 yuan/ton. Under sliding allowance tax, the difference between internal and external cotton prices is 965 yuan/ton.

In 2022/23, the cumulative import will be 1.14 million tons, and from January to June 2023, the cumulative import will be 570000 tons. It is expected that the quantity of imported cotton will increase with great probability after September, and the difference between internal and external cotton prices may shrink in the later period.

Last week, macro sentiment suppressed the market, and the spot basis spread, which was 1024 yuan/ton in September. On September 1, the price difference was greatly affected by policies and macro policies. We focused on changes in commercial inventory, and on September 1, we went out of the normal market again.

Cotton yarn: port stocks of imported yarn increased slightly