Cotton Producing Areas Are Still In Low Popularity, And The Market Will Continue To Fall With Greater Risk

According to the feedback of textile enterprises in Henan, Jiangsu, Shandong and other places, as the main contract of Zheng Mian CF2409 fell below 14000 yuan/ton, the main contract of Zheng Yarn CY2409 fell below 20000 yuan/ton, and some cotton yarn quotations were tentatively reduced by 100-200 yuan/ton, the risk of further decline in the future market was high.

According to the survey, since the middle of May, some textile enterprises have achieved the goal of reducing inventory by producing according to orders, limiting production or even stopping production, and cotton yarn traders and weaving mills have not started centralized replenishment operations. At present, the inventory of gauze in the whole cotton textile industry chain is not large, which is lower than the level of previous years. Most textile enterprises have no plan to significantly reduce the ex factory price of cotton yarn. In addition to the low inventory rate of yarn, it is also related to losses at C32S and below and the upcoming "golden nine silver ten" peak season.

The market trade enterprises in Guangdong, Jiangsu, Zhejiang and other provinces reported that since the middle of July, the inquiry and transaction of rotor spun cotton yarn have continued to pick up, and the shipment of cotton yarn for sanitary wear has accelerated, mainly driven by the successive issuance of orders in the autumn and winter of 2024, but the transaction of C50S and Shanggaozhi combed yarn has continued to be cold and the quotation has declined. Some spinning mills above designated size compress the output of C40S and above, and gradually expand OE yarn and low count ring spinning (some enterprises use coarse count yarn instead of ply yarn), so as to maintain production and reduce holiday days.

In terms of cotton, affected by the off-season of the downstream textile market, textile enterprises continue to purchase cotton on demand. According to the survey of the national cotton market monitoring system, as of July 25, the national cotton cumulative sales rate was 87.5%, 1.8 percentage points lower than the average of the past four years. According to the statistics of Wande, as of June, the national cotton industrial and commercial inventory had reached 4.06 million tons. According to the inventory digestion progress from July to August in the past five years, the cotton inventory will decline to about 3 million tons by the end of August, which is the middle level in the past five years. According to the warehouse receipt data of Zhengshang Exchange, as of July 25, there were 11702 cotton warehouse receipts (468000 tons), a decrease of 1395 (56000 tons) from the previous month, or 10.7%. The recent downward trend is obvious. At present, if the surplus sales loss of unsold cotton in Xinjiang is relatively high, and the enterprise credit funds are relatively sufficient, the willingness to actively reduce prices is not strong, some cotton is planned to continue to be sold next year. Traders and textile enterprises consider that if the cotton futures price continues to fall, they will increase their purchase of cotton in the futures market, so it is expected that the decline space of domestic cotton prices is relatively limited.

Historical data shows that the cotton textile market is more active in the second half of each year than in the first half. According to the data of the National Bureau of Statistics, the average yarn output of domestic enterprises above designated size from September to December in the past decade was 5.53 million tons, 6% higher than the average yarn output from March to June. Generally, the cotton textile market "golden nine and silver ten" starts to stock up from late July to August, which means that cotton demand is expected to gradually recover in the later period. Recently, according to feedback from some textile and garment enterprises in Guangdong, Jiangsu and Zhejiang, market orders increased slightly due to a small number of orders issued in autumn and winter, thus delaying the downward trend of enterprise start-up rate.

However, the local cotton is not optimistic. It is learned from four ginning mills in Anhui that with the sharp drop in cotton futures prices, the local cotton that is difficult to sell has become even more unpopular.

At present, except one ginning plant, which has a large cotton stock, the other three ginning plants have a stock of about 100 tons. The cotton textile market continued to be depressed and the demand for local cotton declined. Since April, the sales of local cotton has become increasingly difficult and the price has become lower and lower. According to a ginning factory, the highest price of 2227 grade lint this year was 15900 yuan/ton, and the lowest price was 14200 yuan/ton, a difference of 1700 yuan/ton. In the face of the continuous decline of cotton futures prices, it is more difficult to sell lint, and ginning plants that store cotton are losing more and more money.