Since last year, the cotton market in Xinjiang has revolved around the Sino-US trade friction and the COVID-19 epidemic. The ups and downs are nothing but the reflection of the two in the cotton market. Trade friction has been expected in the industry, but the COVID-19 epidemic is ” Gray Rhino” caught the market off guard. So how does the epidemic affect the cotton sub-market? Let’s sort it out.
The epidemic broke out in Wuhan around the Spring Festival: there was no danger but it brought quite a surprise to the cotton by-products. It ultimately improved the progress of Xinjiang cotton meal exports and pushed up the price of cotton by-products.
The outbreak of the epidemic in Wuhan around the Spring Festival has several obvious characteristics: first, it cut off international trade, and the import of foreign soybeans caused great anxiety in the industry; second, it disrupted the progress of cottonseed processing in Xinjiang. Only a few oil mills can start operations, and cotton meal stocks have become the hope of exporting to Xinjiang. The few oil mills that have started operations have become a hot commodity. Thirdly, poor logistics at home and abroad have drained the raw material inventory of feed mills. Feed mills are in short supply of raw materials, and imported soybeans are at risk. , Xinjiang cotton vice became a life-saving straw.
The final result of the epidemic around the Spring Festival was that it not only digested a large amount of cotton meal stocks in Xinjiang, but also pushed up the price of cottonseed, allowing oil mills with large cottonseed stocks to unwind. After the epidemic, the price of cottonseed dropped rapidly from 2,200 yuan/ton to 1,950 yuan/ton, but in less than a week, it rose again from 1,950 yuan/ton to 2,300 yuan/ton; while the price of cotton meal fell from 2,250 yuan/ton to 2,150 yuan/ton. Yuan/ton, but it rose to 2,400 yuan/ton in one weekend and 2,550 yuan/ton in two weeks, and basically remained there until the end.
The epidemic broke out in Urumqi in July: the progress of cottonseed processing was delayed and downstream demand was reduced. However, because it was the late harvesting season, the price of cotton byproducts was suppressed, and there was no price surge in the latter part of previous years. There was no surprise. Risk, get through safely.
The main characteristics are: First, it has delayed the processing progress of oil plants. Some oil plants have stopped operations. Some companies that have started operations have been forced to stop operations and reduce production due to poor logistics of personnel, materials, raw materials and products. , the processing progress of most oil plants was delayed; secondly, the export of cottonseeds from Xinjiang was blocked. Shandong and ranches were still able to take away cottonseeds in the early stage of the epidemic. However, logistics was obviously not smooth in the later period, and the cottonseeds in stock could not be exported from Xinjiang; thirdly, cottonseeds and cotton meal were suppressed The pace of the increase is that the epidemic was not until September when the lockdown was suddenly lifted. There is not much time left in the harvesting season. Many oil mills have delayed processing, and traders have a lot of inventory. Cottonseed, cotton meal, and cotton hulls all have a lot of stocks. At this time, sellers mainly focus on shipments. Fortunately, market demand is strong and prices do not fluctuate greatly.
During the epidemic, the price of cottonseed dropped from 2,550 yuan/ton to 2,300 yuan/ton (an extreme price of 2,180 yuan/ton appeared in Jinghe). The price of cotton meal had little impact. In late September, the price dropped from 2,550 yuan/ton to 2,300 yuan/ton. 2,800 yuan/ton fell to 2,600 yuan/ton.
What impact will the epidemic in Kashgar have on the market in October? The industry’s personal experience is that the epidemic has affected the market.
First, let’s take a look at several characteristics of this epidemic: first, it is time-sensitive, as new cotton is on the market, and many cottons are not harvested in time, and some ginners have not started ginning; second, control Measures were gradually tightened, from Kashgar to southern Xinjiang and then to northern Xinjiang. Due to the severity of the epidemic and the detection of logistics transmission, control measures were gradually tightened. In the early stage, only Kashgar was restricted, then southern Xinjiang was restricted, and then all Xinjiang was restricted; thirdly , processing in Kashgar is restricted, processing in other places is not restricted, but logistics in Xinjiang is restricted; fourthly, Kashgar and Hotan are large livestock husbandry areas in southern Xinjiang, and the consumption of cotton hulls, cotton meal and oil residue has shrunk significantly. Last year, cotton in the Aksu region The situation of huge sales of shells and oil residue no longer exists. Under the influence of the aforementioned characteristics, the impact of this round of epidemic has begun to appear:
First, the local market in southern Xinjiang has been blocked, cottonseed cannot be digested, and the consumption of cotton meal, cotton hulls and oil residue has shrunk sharply. There is a large backlog of cottonseed raw materials in Aksu, Kashgar, and oil mills are slow in purchasing, processing, and sales. Several oil mills in Kashgar are barely starting up, and the Aksu oil mill is basically running on and off. The ones that are more affected are cotton shells and oil residues, both of which are mainly targeted at Hotan and Kashgar.
Secondly, logistics out of Xinjiang have been severely hampered, and the digestion progress of cottonseed and cotton meal in Xinjiang has been delayed. Starting in November, stocks of cottonseed and cotton meal in northern Xinjiang gradually increased, and the progress of exporting from Xinjiang significantly slowed down. The negative impact of the Kashgar epidemic on Xinjiang’s cotton by-products gradually became apparent.
Thirdly, cotton by-products are not substitutes, but have been replaced. Xinjiang’s cotton by-products are seriously marginalized. This round of epidemic has had a huge impact on Xinjiang’s cotton fabrics. Cotton fabrics have changed from substitutes to substitutes, and logistics has become a Achilles’ heel. With the large import of U.S. beans, cotton fabrics are gradually being replaced. Except for the northwest region, other regions The amount of cotton used in the region has shrunk sharply.
The outbreak in Kashgar has a crucial impact on cotton seeds this year. It has blocked logistics and restricted consumption. A large amount of cotton seeds cannot be digested and left Xinjiang. This impact is still continuing and is expected to last until after the Spring Festival, which has put great pressure on Xinjiang cotton operations. If a large amount of cottonseed and cottonseed meal remain in Xinjiang until after the Spring Festival, the cotton market will be completely dependent on substitutes. </p