Last week, the COVID-19 epidemic in some parts of the country worsened, and the market’s expectations for downstream holidays were brought forward. Superimposed on the announcement by the U.S. Customs and Border Protection (CBP) in January On the 13th, there were negative news such as the detention of cotton products produced in China’s Xinjiang Uygur Autonomous Region at all ports of entry in the United States. The main 05 contract of domestic Zheng cotton fell by nearly 500 yuan/ton last week.
USDA adjusts cotton production and ending stocks
According to the latest US farmers’ report, global cotton production and ending stocks will decrease in 2020/21. Among them, output was reduced by 1.03 million bales, with the main decrease coming from the United States. Cotton production in Texas, the main cotton-producing state in the United States, is expected to drop by 500,000 bales. Finally, in January, USDA lowered its estimate of U.S. cotton production by 1 million bales. Global ending stocks decreased by 1.2 million bales month-on-month, with the decrease mainly coming from the United States. Looking at the data by country, the data adjustments for the United States and China this month were slightly obvious. U.S. cotton production is estimated to be reduced, exports are estimated to be increased, and consumption is estimated to be reduced by 100,000 bales, ultimately leading to a reduction of 1.1 million bales in the ending inventory estimate. In China, US farmers maintained China’s cotton production estimate unchanged in January, increased China’s cotton consumption estimate by 500,000 bales, and increased China’s cotton import estimate by 500,000 bales. Ultimately, the ending inventory estimate remained unchanged. The month remains unchanged. The export sales report released by the U.S. Department of Agriculture showed that in the week ending January 7, U.S. cotton export sales were 376,300 bales, ending the previous decline. China was the largest buyer, purchasing 151,200 bales, accounting for 40% of the total US cotton exports that week. From this year to November, China has imported a total of 358,600 tons of US cotton, an increase of 318,800 tons from the same period last year.
Commercial inventories have reached a new high, and new cotton sales are accelerating
October to December is the period when domestic new cotton is concentrated on the market. During this period, domestic cotton commercial inventories Showing a month-on-month increase. As of the end of December, domestic cotton commercial stocks were 5.29 million tons, a new high for the same period in recent years. Among them, the month-on-month increase was 720,000 tons, and the year-on-year increase was 227,000 tons. The increase was 120,000 tons lower than the same period last year. From an absolute value perspective, domestic cotton commercial inventories are under greater pressure, but compared with the same period last year, the year-on-year increase has declined, and the pressure is not as good as the same period last year. Since the beginning of this year, domestic downstream consumption has improved significantly year-on-year, and the sales progress of new cotton is in most cases faster than the same period last year and the same period in the past four years. Since late December last year, downstream consumption has exploded again, downstream enthusiasm for purchasing raw materials has increased, yarn prices have led the rise, and new cotton sales have accelerated again. According to survey data from the National Cotton Market Monitoring System, as of January 15, 2021, the national new cotton sales rate was 51.7%, an increase of 4.7 percentage points year-on-year, and an increase of 0.2 percentage points from last week; an increase of 7.3 percentage points from the average of the past four years. percentage points, an increase of 1 percentage point from last week. Among them, Xinjiang sales accounted for 50.0%, an increase of 4.3 percentage points from last week, an acceleration of 4.9 percentage points from the same period last year, and an increase of 0.4 percentage points from last week.
CBP “temporary detention order” scope expanded
On January 13, local time, the U.S. government once again used the excuse of “forced labor” and stated that it would detain cotton and tomato products produced in Xinjiang at all ports of entry to the United States. . The “temporary detention order” applies to raw fibers, clothing, and textiles made from cotton grown in Xinjiang, as well as canned tomatoes, sauces, rice dumplings, and other tomato products from Xinjiang, even if they are processed or manufactured in a third country. Compared with December 3, 2020, the scope of the “temporary detention order” has been expanded from the Xinjiang Construction Corps and its affiliated units to the entire Xinjiang region. In the past two years, Sino-US trade frictions have continued, and the bilateral trade volume between China and the United States has continued to decline. The impact of the Xinjiang cotton ban on the industry will not be eliminated in the short term. Judging from the situation in the downstream of cotton spinning, market concerns have intensified due to the impact of restrictions on the use of Xinjiang cotton. The demand for imported yarn may have expanded, which has squeezed out the Xinjiang cotton product market to a certain extent. In the long run, this may have a negative impact on the use of Xinjiang cotton. greater impact.
As the holidays approach, downstream demand slows down
It is reported that starting last week, some textile workers in Jiangsu and Zhejiang began to return home one after another, and the domestic yarn and gray fabric operating rates There has also been a significant decline since last week, with both operating rate and load index beginning to fall. As of Monday, the domestic yarn and gray fabric operating rate index dropped to 59.9 and 57.7, down 0.6 percentage points and 2.2 percentage points from the same period last week. The two operating load indexes have shown signs of falling after New Year’s Day. However, yarn and gray fabric inventories are still in a state of reduction for 6 days and 20 days respectively, which are at a low level for the same period in recent years. The overall inventory pressure is not great. In terms of prices, yarn and gray fabric prices remained flat and slightly increased last week, and the previous rising prices have cooled down significantly. On Tuesday this week, the C32S yarn price index was reported at 24,050 yuan/ton, and the 32-count pure cotton twill price index was 5.43 yuan/meter. Prices have been flat since this week. With the development of the new coronavirus epidemic and the approach of the Spring Festival, on the one hand, consumption is expected to be affected to a certain extent; on the other hand, downstream holiday plans may be advanced. Overall, the current market is affected by factors such as the epidemic, the U.S. ban on Xinjiang cotton and products, and pre-holiday risk aversion. It is expected that Zheng cotton prices will fall back to a limited extent.
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