According to feedback from cotton traders in Shanghai, Qingdao and other places and mainland cotton-consuming enterprises, the basis of bonded ports, cargoes of US cotton, Brazilian cotton, West African cotton, and Australian cotton has continued to stabilize since mid-January.
With the main ICE cotton futures contract consolidating above 80 cents/pound, the “countdown” to Biden’s entry into the White House and the release of the US government’s $1.9 trillion fiscal stimulus package, global cotton consumption and demand are recovering faster than expected, China and the United States The first phase of the trade agreement will “effort” to advance in the first quarter of 2021 and other positive factors. ICE’s bullish sentiment prevails, and traders are not willing to lower the basis.
On January 18-19, Qingdao Port’s January/February/March shipping schedule US cotton ME 31-3 36 (strong 28/29GPT) basis is 10.5-11.5 cents/pound (quoted ICE2103+basis); EMOT 31-36 (strong 28GPT) basis difference is 12.25-12.75 cents/pound; while the January/February shipping schedule of Brazil M 1-1/8 (strong 28GPT) and M 1-5/32 (strong 28GPT) basis are respectively It is stable at 7.5-8.25 cents/pound and 8.5-9.5 cents/pound. The basis difference with US cotton of the same quality and grade has expanded to 2-3 cents/pound.
A large trading company in Huangdao said that in recent days, domestic buyers have not only increased inquiries and transactions for Indian cotton, US cotton, Brazilian cotton, West Africa and other cargoes on the 1/2/3 shipping date (mainly Cotton spot in 2019/20 and 2020/21), and a few large and medium-sized cotton textile mills and middlemen are paying attention to Brazilian cotton in May/July shipping schedule 2021.
Industry insiders analyze that on the one hand, 894,000 tons of cotton import quotas within the 1% tariff have begun to be issued in 2021; in addition, the remaining 1% quota in 2020 and the sliding tariff processing trade volume will be intensively used before the end of February, so the US dollar Quoted foreign cotton is favored; on the other hand, judging from the quotations of several large foreign businessmen and import companies, the bonded/immediate shipment of 2019/20 and 2020/21 US cotton has low color grade and low length (32-35) The proportion is relatively high (in the middle and late stages, Hua Qiangli can generally still reach 28GPT and above); while a small amount of 31-3 and 21-3 spot quotations are on the high side.
In addition, as the Federal Reserve’s unlimited monetary easing policy and fiscal stimulus increase, and global commodity inflation accelerates, the pressure for RMB appreciation will still be prominent in the first half of 2021. Signing cargo and locking up resources will be beneficial to cotton spinning mills and traders. lower the cost. It is understood that in recent days, the number of quotations for port bonded, January/February/March shipping schedules for U.S. cotton, Brazilian cotton, Indian cotton, West African cotton and other resources has increased significantly compared with December. They all want to seize the opportunity of “quota issuance, demand rebounds, Concentrate on digesting” shipping opportunities. </p
