With ICE cotton futures having five consecutive positive days, the United States passing a $2.3 trillion COVID-19 relief bill, and the House of Representatives overwhelmingly passing a $2,000 personal transfer payment, the U.S. stock market and commodity futures market have a strong bullish sentiment. Quotes for January/February/March shipments and bonded cotton such as US cotton, Brazilian cotton, West African cotton, and Indian cotton have continued to rise, but most traders have not adjusted the basis (the basis for US cotton increased slightly last weekend), and the external market “rising tide lifts all boats” “As a result, inquiries and signings by Chinese cotton textile mills and intermediaries have slowed down compared with previous weeks; while port customs clearance of Brazilian cotton, US cotton, Indian cotton, etc. is more active (RMB quotation), especially some “cost-effective” “Higher Brazilian cotton, US cotton, and West African cotton resources in 2018/19 and 2019/20 have attracted the attention and favor of buyers.
A trader in Jiangsu said that the sales and clearance of 2018/19 Brazilian cotton, US cotton, and Indian cotton in warehouses in Qingdao, Shanghai, Zhangjiagang and other places have recently accelerated, and some domestic textile companies have continued to release their willingness to restock before the Spring Festival. , the company’s more than 800 tons of 2018/19 Indian cotton M 1-5/32 were sold out in more than a week.
The main reasons for the good customs-cleared cotton inquiries and shipments in each main port are as follows:
First, the cotton import quota within the 1% tariff is “not available” (the new quota for 2021 has not yet been issued), and there are foreign cotton purchases. Small and medium-sized cotton textile mills and middlemen in demand can only “do the next best thing” and directly purchase customs-cleared foreign cotton;
Second, as the market price of CF2105 exceeded 15,000 yuan/ton, the basis price of customs-cleared cotton continued to rise; and then superimposed The sharp appreciation of the RMB in the early stage reduced import costs, and traders’ profits increased significantly, so the bargaining space left for buyers also expanded accordingly;
Third, the grade, quality, and spinnability of Brazilian cotton and American cotton that traders cleared before mid-December It is relatively good and suitable for making 40S and above cotton yarns with cotton; while the 2019/20 cotton with a shipping date of December/January/February is generally low in color and short in fiber length (for example, the length ratio of US cotton 32-35 is relatively high ), large impurities;
Fourthly, domestic cotton textile enterprises and middlemen generally have abundant liquidity in 2020/21 (not only low gauze and cotton inventories, but also high bank credit lines and low interest rates), so the demand for L/C 90 The willingness to purchase goods is not strong;
Fifth, compared with large-dollar contract purchases of ship cargo and bonded cotton, traders’ customs clearance cotton sales are more flexible, and the starting point for a single purchase even drops to 1 container. For small and medium-sized spinning yarns, It is simple and practical for factories and small trading enterprises, and effectively relieves the pressure of raw materials on cash flow. </p
