This week (June 28th-July 2nd), domestic cotton prices rose rapidly after oscillating; international cotton prices first fell and then rose, higher than the average price of last week; domestic cotton yarn prices showed a marginal weakening trend, and international cotton yarn prices The price stopped rising and falling; the price of polyester staple fiber turned down.

1. Domestic cotton prices are rising

This week, the cotton textile market was calm and the market was waiting for policy guidance. Short-term funds took the opportunity to enter the market, which promoted the rapid rise of domestic cotton prices after a weak oscillation. From June 28 to July 2, 2021, the average settlement price of the main cotton futures contract on the Zhengzhou Commodity Exchange was 16,021 yuan/ton, an increase of 314 yuan/ton or 2.0% from the previous week; representing the market price of standard-grade lint in the mainland The average price of the national cotton price index B was 16013 yuan/ton, an increase of 156 yuan/ton or 1.0% from the previous week.

2. International cotton prices first fell and then rose, higher than last week’s average price

This week, affected by the decline in the actual area of ​​cotton in the United States, the international cotton price fell for a while, and the ICE cotton price fell below 85 cents/lb. After the cotton price fell sharply, speculative bulls entered the market to buy the bottom and raised cotton prices again. From June 28 to July 2, 2021, the average settlement price of the main contract of the Intercontinental Exchange Cotton Futures (ICE) was 86.45 cents/lb, an increase of 0.11 cents/lb from the previous week, an increase of 0.1%; representing imported cotton China The average international cotton index (M) average price of the main port CIF is 97.47 cents/lb, an increase of 0.66 cents/lb from the previous week, or 0.7%, which is equivalent to RMB 15,7979/ton of import costs (calculated based on a 1% tariff, Including port miscellaneous goods and freight), an increase of 82 yuan/ton, or 0.5%, compared with the previous week, the international cotton price is 435 yuan/ton lower than the domestic cotton price, and the price difference between internal and external prices has increased by 75 yuan/ton compared with last week.

3. Domestic cotton yarn prices weakened marginally, international cotton yarn prices fell

This week, the textile market has not changed much. The frequency of yarn purchase by traders has decreased, and the price of pure cotton yarn has risen first and then dropped; the early-stage price of imported yarn has been inflated. Recently, there have been few orders in China, and traders’ quotations have been lowered. It has risen since mid-term; the price of conventional outer yarn is currently higher than domestic yarn by 313 yuan/ton. At the stage of proofing and development of domestic downstream grey fabrics, there are not many actual orders as a whole, and the price of pure cotton fabrics remains stable. The supply of polyester staple fiber is light, and the price has changed from rising to falling with the raw material PTA, and the average price is still higher than the level of last week.

Fourth, outlook

The global economic recovery and soaring prices continued, and the international cotton market returned to fundamentals. In June, the US manufacturing PMI was 60.6%, a decrease of 0.6% from May. An indicator measuring the price paid for raw materials soared to the highest level since 1979. The International Monetary Fund (IMF) predicts that the Federal Reserve will increase the rate as early as the end of 2022. Interest, it may start to reduce the scale of asset purchases from the first half of next year. In the international cotton market, the growth of new cotton in the United States continued to improve, with the budding progress being 32%, an increase of 11 percentage points from the previous week; the Indian cotton planting progressed smoothly, and the southwest monsoon alleviated the drought in cotton fields. ICAC's latest global production, sales and inventory forecasts have significantly raised global cotton consumption in 2020/21, leading to a slowdown in the expected growth of global cotton consumption in 2020/22 to 0.78% year-on-year to 25.8 million tons, and output increased by 5.66% year-on-year to 25.59 million. Ton. As the epidemic stabilized, textile factories in Pakistan and southern India resumed operations. The People’s Daily of Vietnam reported that workers from Vietnamese textile and footwear enterprises will return to the factory in July. Due to the resumption of centralized shipments and shipments at ports, ocean freight charges have risen again recently; after the US terminal apparel retail sales in May increased by 2.9% month-on-month, the US consumer confidence index showed a rebound in June. In summary, the global economy continues to recover, the Fed’s monetary policy tightening is expected to continue brewing, and the follow-up international cotton market will gradually return to fundamentals and maintain oscillations in the short term.

Steady macro policy takes the lead, and domestic cotton prices continue to be stable. Since late June, the central bank has launched small-scale liquidity injections to achieve stable liquidity across quarters. Recently, the central bank once again emphasized the need to implement monetary policy flexibly and accurately to promote a further decline in real loan interest rates. In the domestic cotton market, Xinjiang's cotton has been growing well recently, and the cotton has gradually entered the period of blooming buds and blooming bolls. It is expected that cotton topping will begin after July. In the spot market, the cotton warehouses outside China’s main ports have recently shown a trend of "bonded cotton is supplemented while non-bonded cotton is decreasing"; next week, the cotton reserve will be released, and 600,000 tons are planned to be released from July 5th to September 30th. In principle, a balanced delivery will be implemented. In this round, the circuit breaker mechanism was adopted again to maintain the smooth operation of the market. The current downstream spinning profit is still high at more than 1,500 yuan/ton, but the textile market has entered the off-season, and the cotton yarn inventory of traders is relatively high. Recently, the spinning mills have insufficient confidence to raise prices again, worrying about the resistance of downstream customers. With the start of the reserve cotton rotation, domestic textile companies will have the opportunity to purchase more cost-effective cotton resources, which will help improve the competitive advantage of domestic yarn. Under the relatively stable policy, domestic cotton prices are expected to run smoothly.