According to feedback from several international cotton merchants and large and medium-sized cotton importing companies, in the past week or so, not only did the arrival and storage volume of Brazilian cotton in Hong Kong increase significantly compared with November and December, but the RMB quotation continued to be active (including Brazil in 2019 and 2020). Cotton), domestic cotton textile enterprises and traders focus their procurement on Brazilian cotton and Indian cotton, while US cotton, West African cotton, Australian cotton, etc. have unsatisfactory sales due to low customs clearance, low cost performance, color grade and quality.
A cotton company in Zhangjiagang said that there are three main reasons for the recent surge in Brazilian cotton arriving at the port: First, due to the impact of the new crown epidemic, tensions on freighters and containers, and rising sea freight, this country’s The Brazilian quilts arriving in Hong Kong in November/December have been delayed by 20-30 days or even longer; secondly, due to truck logistics and labor shortages at some ports in the United States since late December, containers are “hard to find” and the waiting period for cargo ships The long wait has resulted in a large backlog of U.S. cotton. Some foreign businessmen and traders took the opportunity to transfer and ship goods from various Brazilian ports. On the one hand, they replaced the delivery of U.S. cotton; on the other hand, they seized the Chinese consumer market; third, compared with December/January The shipping schedule of American cotton is “miscellaneous, messy, and very different”, while Brazilian cotton has higher quality and color grade indicators (M grade and above, strength 28GPT and above, length 1-1/8 and above), and is more popular among domestic cotton users. favored by enterprises.
From the quotation point of view, the basis difference of Brazilian cotton has increased in mid-to-late January (including cargo, bonded and customs clearance cotton), and the amplitude is significantly higher than that of other producing areas such as US cotton, Indian cotton, and West African cotton. lint. From January 24th to 25th, the basis difference of Brazilian cotton for the January/February/March shipping period in China’s main port generally reached 7.5-8.5 cents/pound; while the basis difference of US cotton MOT/ME 31-4 36 for the same shipping period was only 8- 9 cents/pound, the quality of Brazilian cotton is benchmarked against that of US cotton, and the price trend remains unchanged. The reasons are as follows:
First, so far, the import and export of Brazilian cotton at the port has been relatively smooth, and the inventory pressure has not increased. Not big (bonded + non-bonded), traders have sufficient confidence to raise prices on the premise of sufficient cash flow; secondly, foreign businessmen and traders have strong expectations for ICE to continue to rise in the first half of 2021; thirdly, in 2020/21 Brazil’s cotton planting area has declined significantly due to serious lack of rainfall, competition between soybeans and corn and cotton for land, and both output and exports will decrease. Fourthly, Sino-US trade relations are still full of uncertainty, and the US policy towards China has made Brazilian cotton Exports continue to maintain their advantage. </p
