As of early October, Xinjiang’s cotton procurement has begun. Most cotton ginning companies have begun purchasing, and the processing progress this year is significantly faster than in previous years.
Current , Ginning companies are still most concerned about the purchase price. Since the purchase price of seed cotton accounts for the largest proportion of the processing cost of lint cotton, the current purchase price of Xinjiang seed cotton is more than 1 yuan/kg higher than the same period last year, while the futures price of Zheng cotton is higher than that of the same period last year. It was basically the same last year, causing many ginning mill owners to complain and complain.
The main reasons why the purchase price of seed cotton this year is higher than last year are the following three points (taking northern Xinjiang machine-picked cotton as an example):
1. The impact of futures on seed cotton acquisition
April 15, 2019 Zheng Cotton started to fall from a high of 16,810 yuan/ton until the low of 11,970 yuan/ton on September 30 during the acquisition period, with a cumulative decline of 4,840 yuan/ton. There was no obvious rebound during this decline, and the low of 11,970 yuan/ton was positive. It is the peak purchase period, and the National Day holiday is coming soon. This is psychologically panic for the ginner owners, and they dare not collect seed cotton at high prices. The purchase price of many ginners is about 4.5 yuan/kg, and the cost of lint is between Below 12,000 yuan/ton. This year, after falling in early February, the futures price bottomed out at 11,000 yuan/ton on March 24. After that, it fluctuated upward, with a cumulative rebound of more than 2,000 yuan/ton. When new flowers bloomed, the futures price was around 13,000 yuan/ton. The futures price closed at 12,800 yuan/ton on September 30.
2. Last year, ginners made considerable profits. This year, new ginneries will continue to increase, exacerbating the rush to harvest seed cotton.
Last year, the sales progress in Beijiang was faster than in previous years, and more than 80% of participating futures basis points were delivered with warehouse receipts. As long as the Beijiang ginning factory achieved sales before the Spring Festival , basically all are profitable, with profits ranging from 500-1500 yuan/ton. Last year, twenty or thirty processing lines were added in northern Xinjiang, and a certain number of production lines were also added in southern Xinjiang. As a result, the acquisition volume of some ginning plants in various counties and cities decreased by more than 20% compared with the same period in 2018. This year, northern and southern Xinjiang continued to increase. After the ginning processing line was closed, the rush to harvest became more and more intense, and the purchase price remained high.
3. The price of cottonseed is higher than the same period last year
Cottonseed accounts for about 50% of seed cotton. The sales price of cottonseed also affects the price of lint. From September to early October last year, cottonseed in Northern Xinjiang was 2 Yuan/kg, this year cottonseed is 2.2-2.3 Yuan/kg.
The National Day to late October is the peak purchase period for machine-picked cotton in Northern Xinjiang. Whether the purchase price of seed cotton will remain as strong as when the scale was opened and continue to rise, based on the analysis of the following factors, it is believed that there is a high probability that the price of machine-picked cotton will consolidate around 6 yuan, and it will be difficult to raise it significantly.
1. The current purchase price of seed cotton for processing into lint cotton is now upside down
The price of 40% of the clothing cotton picked by the clothing split machine purchased in the early stage of Beijiang is at 5.7 yuan/kg, cotton seed price is 2.15 yuan/kg, processing fee is calculated as 1,000 yuan/ton, machine-picked cotton cost is more than 13,200 yuan/ton, plus short-distance transportation fee and warehouse fee, the cost is calculated at 200-250 yuan/ton. It is about 13,400 yuan/ton. If the contracting factory adds 400-500 yuan/ton per ton, the cost will reach more than 13,800 yuan/ton. After October, the purchase price of machine-picked cotton rose to 6 yuan/kg, and the cost was about 14,000 yuan/ton. In addition, as a large number of cotton seeds are put on the market, the price of cotton seeds is expected to fall, which indirectly leads to the continued increase in lint costs. At present, the price of CF2101, the main product of Zheng Cotton, is below 13,500 yuan/ton. For most ginners, the basis price and warehouse receipt cost are still upside down. Moreover, the indicators that have been inspected by the public inspection in Northern Xinjiang this year are generally weaker than last year, and the premium of lint cotton is low. There are also some products with obvious discounts, which are even less cost-effective for cotton ginning mills.
2. The old cotton inventory is large and it is difficult to sell the spot quickly
The total national cotton commercial inventory at the end of August was about 2.45 million tons. , lower than 70,900 tons in the same period last year. Most domestic textile mills have inventories of one month or more, and commercial inventories can be used for another four months. Most textile companies will not be able to use new cotton until November, but Xinjiang processing plants can process enough in October.To 1.5 million tons, there will be a lot of cotton waiting to be sold.
3. Cotton companies place their hopes on rising futures and whether the beautiful market in 2019 can be repeated. ?
2019 is a relatively good year for cotton companies. The futures price was around 12,000 yuan/ton in the early stage of acquisition, and around 13,000 yuan/ton at the peak of acquisition. By 2020 In January it rose to 14,450 yuan/ton (May contract). The amount of warehouse receipts generated by the basis price of lint processed by cotton enterprises (mainly basis price) reached a historical peak. Including spot sales, the profit per ton of lint can reach 1,000 yuan. Yuan/ton or more. So can 2020 repeat last year’s market situation?
(1) China and global supply are relatively loose
(2) There is little hope of Xinjiang cotton production reduction due to speculation
August In the second half of the year, the National Cotton Market Monitoring System launched a nationwide special survey on cotton growth. The samples covered 15 provinces (autonomous regions), 50 cotton-growing counties (cities, groups), and 1,895 designated cotton-growing information contact households. The survey shows that as of the end of August, the weather in the main cotton-producing areas is generally conducive to cotton bolls and fluffing. The new cotton yield in 2020 is expected to be 128.5 kg/mu, a year-on-year increase of 5.4%, and the total output is 5.868 million tons, a year-on-year increase of 0.4%. From the beginning of this year’s scale opening, cotton farmers, cotton traders, and ginners have all known that new non-burning ginneries have been built in northern and southern Xinjiang, and rush harvests are inevitable. After rush harvests, the purchase volume of ginners will be divided up, instead of reducing the total output. .
(3) Downstream consumption has not improved substantially, especially textile and clothing exports
Although the domestic epidemic has been controlled, consumption is also declining. Recovery is slow, but domestic textile consumption is still dominated by mid- to low-end products, with e-commerce and the Internet as the main purchasing channels. In September, the author visited textile factories in Jiangsu, Henan, and Hubei and learned that yarns with a count of 32 and below have a large output and are sold quickly, while there are fewer manufacturers of high-count yarns with a count of 60 or more, and in some areas, yarns with a count of 60 or more are produced. The yarn is thrown out. The global epidemic continues to spread, causing production and life in many countries around the world to be affected, and also directly affecting consumption. In addition, the U.S. Congress passed a bill banning the import of all Xinjiang products and the appreciation of the RMB exchange rate. These are all detrimental to China’s textile and apparel exports.
To sum up, it will be difficult for CF2101 to break through 14,000 yuan/ton like last year. Regarding the purchase price of seed cotton, cotton companies must put risk prevention first in their operations. They must not blindly follow the trend and rush to harvest. They must strictly control the purchase quality, improve processing technology, and ensure the processing of high-quality lint. Cotton company bosses must also Always pay attention to the market, carefully study and judge price trends, implement sales through multiple channels to diversify risks, and flexibly use derivatives tools for risk management, so that you can remain invincible in the fierce competition. </p
