Judging from the feedback from cotton-related companies, as ICE and Zheng Cotton support each other, the market continues to rise (ICE’s main contract finally opened the 75 cents/pound mark; and the CF2105 contract once stood at the 14,900 yuan/ton round mark) As well as domestic cotton textile companies and intermediaries starting the last round of raw material replenishment before the Spring Festival, the offshore RMB exchange rate rising above 6.5 to the US dollar and other stimulations, since mid-December, not only the 11/12/1/3 shipping schedules of US cotton, Brazil Quotes for cotton, Indian cotton, West African cotton, etc. have increased significantly, and bonded and customs-cleared foreign cotton sources at ports have also sprung up like mushrooms after a rain.
However, as the high foreign cotton basis differentials of various varieties and grades have continued to stabilize, and because the cotton import quota within the 1% tariff has been basically exhausted, some downstream buyers are skeptical about whether ICE can stand firm at 75 cents/pound. Therefore, although Brazilian cotton, US cotton, Indian cotton and other cargoes and port spot quotations are sufficient, traders’ enthusiasm for shipments has also returned with the rebound of internal and external markets, but they hold quotas and plan to overdraw the 1% tariff quota in advance in 2021. However, buyers are not very enthusiastic about making inquiries and placing orders, and their wait-and-see mood prevails.
It is understood that as of now, Qingdao, Zhangjiagang and other ports still have a certain amount of 2018/19 US cotton, a small amount of Indian cotton and Brazilian cotton for sale, and the quotations are generally lower than the 2019/20 spot spot at 200-250 yuan/ton, except for color In addition to the obvious decline in grade, various indicators such as length, strength and impurity content are still relatively good, and due to traders’ strong willingness to clear warehouses and ship goods, the bargaining space is slightly larger than that of 2019 and 2020 cotton. Shandong, Jiangsu, Zhejiang, Henan, etc. Local textile companies that spun cotton yarn with counts of 40S and below are more proactive in picking up goods at the port.
On December 15-16, Qingdao Port quoted 2018/19 US cotton 41-4 37 (strong 28GPT) at 15,300-15,350 yuan/ton; while the basis quote for 2019/20 US cotton 41-4 37 was Reaching 15,500-15,600 yuan/ton. A large cotton company in Zhangjiagang said that in recent days, as the price difference between US cotton 31-3 36/37 and Brazilian cotton of the same quality and grade has gradually widened from 0-50 yuan/ton to 100-200 yuan/ton, yarn mills, The inquiry and delivery of goods by middlemen are once again tilted toward Brazilian cotton.
According to CFTC statistics, as of December 5, there are 87,521 ICE futures 2020/21 ON-CAll contracts. However, as ICE’s main contract has successively stood at 73 cents/pound and 75 cents/pound, and regardless of Judging from technical aspects, fundamentals and external market news, ICE is expected to test 78 cents/pound or even 80 cents/pound. Therefore, the ON-CALL point price contract faces greater difficulty in execution, or the buyer and seller may negotiate an extension. If the price is set, the seller will buy back or cancel the contract, otherwise the buyer will inevitably lose money by setting the price before the end of December. An international cotton merchant reported that with the main ICE contract opening at 74 cents/pound and 75 cents/pound, the phenomenon of negotiating a 1-2 month delay in price points or sellers redeeming contracts has gradually increased. </p
