Recently, basis purchases by traders and futures companies have accelerated, and the “fixed price” has decreased. As the price of Zheng cotton has risen to more than 14,600 yuan/ton, the market price has fully covered the comprehensive cost of machine-picked cotton of grade 4128 and above. Some cotton processing companies have rushed to ship goods and settle down. In addition, a large number of cotton companies in Xinjiang are facing pressure to repay loans, repay financing, and settle workers’ wages. Therefore, in addition to clearing and selling cotton seeds, they also sell a certain proportion of lint to alleviate cash flow difficulties and reduce market risks.
A large cotton company in Nanjing said that before mid-November, the company only signed a contract to purchase 500 tons of machine-picked cotton from Northern Xinjiang in 2020/21, a sharp decline from the same period last year. First, the current and futures inversion is quite prominent, and cotton processing enterprises in Xinjiang are reluctant to sell; second, the market price of Zheng cotton is low and the far and near contract prices are inverted, so cotton traders and futures and current companies have no room for basis operation; third, from September to November in Xinjiang, the futures and current prices are inverted. Domestic cotton companies have relatively sufficient capital flows and have not adopted a “short-term, flat, fast” sales model; fourth, Xinjiang cotton procurement, transportation, and shipping have been greatly affected by the new crown epidemic. The company plans to purchase 4,000-5,000 tons of lint cotton in early December, requiring a lint length of 28mm and above, a breaking strength of 27.5cN/tex and above, and a horse value of 4.1-5.1. At present, ginning factories in Xinjiang have reported a lot of resources and have a relatively large space for selecting goods. They have started purchasing on December 5.
It is understood that from December 7th to 8th, the quotations for the “Double 28” machine-picked cotton in the North Xinjiang supervision warehouse were concentrated at 14,400-14,600 yuan/ton, but because Zheng cotton was in an upward channel, ginning The sentiment of “sell down, not sell up” in factories has heated up, and some companies choose to sell by placing orders and setting prices. The quotation price of “Double 28” machine-picked cotton in inland warehouses such as Henan and Jiangsu reaches 15,100-15,200 yuan/ton, and the price difference between cotton inside and outside Xinjiang is 500-600 yuan/ton. Therefore, Xinjiang companies move medium-high quality and good spinnability lint to inland warehouses. And sell as early as possible. </p
