Last week, international spot transactions were generally acceptable, but US cotton sales were disappointing, mainly because China did not purchase. Although the US cotton signing situation is still reasonable at present, China’s consumption and imports must remain strong as the basis for the market’s bullishness.
That week, the spot transaction of Australian cotton was good. The basis difference of the 2021 new flowers shipped in the fourth quarter of this year and the first quarter of next year for M 1-5/32 grade cotton was 1200 -1275 points (quoted by Southeast Asian ports), the quoted basis in Jakarta, Indonesia, of the same grade shipped from April to September next year is 900 points, the quoted basis of SM 1-1/4 in Ho Chi Minh, Vietnam is 1450 points, and the transaction basis is 1400 points.
It is understood that some combed yarn manufacturers around the world have begun to use Australian cotton to replace American Pima cotton. The reason is that the supply of American Pima cotton is very tight and the price is too high. The US Pima cotton price of 250 cents/pound has discouraged combed yarn mills, forcing textile mills to start sacrificing some quality and settle for second best. Overall, the importance of Australian cotton in Asia has increased significantly, with demand for Australian cotton from countries such as Bangladesh, Vietnam, and Indonesia.
At this stage, logistics problems and short-term supply constraints have repeatedly restricted U.S. cotton export shipments, and it is difficult for weekly shipments to exceed 200,000 bales. At present, U.S. cotton stocks are basically sold out, and most of the shipments are old cotton that has been delayed. The tight supply of U.S. cotton and the delay in the launch of new cotton will continue to restrict the shipment of new flowers. Coupled with logistics bottlenecks, shipment problems will arise in the next two months. will reach its peak. To complete the USDA export forecast, the weekly shipment volume of U.S. cotton needs to reach more than 290,000 bales, but the current weekly shipment volume is 200,000 bales, which is about one-third less. The more this happens, the greater the pressure will be on U.S. cotton export shipments in the future. Based on the current situation, port logistics problems may continue until 2022.
In addition to shipments, U.S. cotton signings are also not ideal. China’s signing volume of U.S. cotton for 2021/22 has been significantly behind the same period last year. In 2020/21, China signed contracts for more than 5 million bales of U.S. cotton, but last week only 26,000 bales of U.S. cotton were shipped to China. If 50,000 bales of U.S. cotton are shipped per week in the future, U.S. cotton exports to China this year will only be just over 2.5 million bales. As time goes by, the impact of logistics problems on U.S. cotton exports will gradually increase. At present, the signing of contracts between China and Vietnam is not strong. Vietnam has encountered a second epidemic blockade. Cotton imports and shipments are seriously lagging behind. Bangladesh and Indonesia also have very little demand for US cotton. It can be said that the situation of US cotton exports in 2021/22 is not optimistic.
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