Since August 25, the Cotton Corporation of India (CCI) has suspended reserve sales. Previously, the transaction of Indian cotton reserves was hot, and the selling price has also been raised several times. Why did India’s reserve sales come to a sudden halt? ? How has the sales situation been since the start of filming? What kind of adjustment has occurred in the selling price?
01 The recent transactions have been hot and the reserve cotton inventory under MSP has decreased
According to statistics, before this dumping of reserves, the total reserve cotton inventory in India was around 1.95 million tons, including 2018/19 There are about 150,000 tons of old cotton in the year, and the remaining 1.8 million tons are cotton in 2019/20. Since the reserve was launched for sale, the cumulative transaction volume has been around 880,000 tons, and the inventory balance is 1.07 million tons, including 20,000 tons of old cotton and 1.05 million tons of 2019/20 cotton.
From the overall situation, the sales progress of India’s reserve cotton continued to be slow until the end of July, and a large number of concentrated transactions were basically concentrated in August. The main reasons for the improvement in transactions include the rapid recovery of the operating rate of domestic textile mills in India, increased discounts, extended delivery times, and traders’ improved expectations for the market outlook. The purchasing entities are basically Indian domestic textile mills, traders, and exporters. host.
02 After several adjustments, the selling price first fell and then rose
This year, India’s reserve cotton sales broke the historical tradition of high closing and high selling, and sales were implemented at a discount for the first time. In the later period, based on factors such as market price fluctuations and actual transactions, CCI made several adjustments to varying degrees from the starting quantity, sales floor price and discount intensity, and the overall trend showed an initial decrease and then an increase.
03 Why should we brake suddenly when the transaction is so hot?
From no one paying attention to booming transactions, India’s domestic cotton reserve inventory has significantly reduced, which not only temporarily alleviates the inventory pressure before new cotton is launched, but also meets the production needs of some textile companies. So what made CCI choose to brake suddenly and suspend selling? Is it because it cannot afford the huge selling losses? It is reported that the reason for the suspension is that on the one hand, the recent sudden increase in transaction volume has increased the pressure to pick up and ship out of the warehouse; on the other hand, the current epidemic situation in India is still severe and the impact continues, and the selling rhythm needs to be controlled to ensure the smooth progress of all work.
On the whole, whether it is the recent ICE cotton futures price center of 65 cents or the current domestic Indian cotton bonded spot price of 12,000 yuan/ton, the Indian cotton reserve The selling prices this year are all at absolute lows in the market. In addition, the quality of India’s cotton reserves is relatively guaranteed, which will surely squeeze out some market share. Especially when the sales of carded yarn in the textile market are good, it will put certain pressure on the sales of US cotton and Brazilian cotton. According to market feedback, it is expected that some CCI reserve cotton will enter the domestic market from September to October. It is necessary to pay close attention to changes in domestic imported cotton stocks.
Why do Indian yarn quotations rise “arrogantly”?
According to feedback from cotton yarn trading companies in Guangdong, Jiangsu, Zhejiang and other places, since early and mid-August, there have been inquiries for port bonded, customs clearance Brazilian cotton, Indian cotton, West African cotton, Mexican cotton, etc. and transactions continued to improve, with “less cotton coming into the warehouse and more coming out of the warehouse” at the port. Contrary to the reduction in storage capacity pressure, not only the shipments of external yarn at the port have started to pick up, but foreign yarn mills and cotton yarn trading companies have become increasingly vocal about price increases, especially Indian yarn and Vietnamese yarn.
Intermediaries in Foshan, Zhongshan, Guangzhou and other places said that in the past half month, except for C20S-C32S high-end package bleached yarn, the transaction volume was surprisingly poor, JC21S, JC32S, OE16S, OE21S Inquiries and inspections have also bottomed out; however, shipments of high-count Indian yarn, Vietnamese yarn, and Indonesian yarn above JC40S have not improved much.
Weaving factories in Shandong, Henan and other places reported that FOB and CNF of OE8S-OE16S and C20S-C40S from India have arrived in more than a week. The quotations have increased significantly (Pakistani yarn prices have remained stable inside and outside the market, and traders have been relatively cautious in raising prices). The first result is that the shipment and delivery of Indian “futures yarn” signed in May/June has become more difficult, and Indian yarn mills have delayed the execution of the contract. Or ask for price negotiation, add attachments or re-sign the purchase and sale contract; second, the enthusiasm for signing Indian yarn for the October/December shipping schedule has cooled down.
Industry analysis shows that the factors causing the “arrogant” increase in quotations from Indian yarn mills and exporters are as follows:
1. The CCI auction floor price and the domestic spot S-6 price in India have been raised in turn (the average spot price of S-6 has increased by 5-6% cumulatively in one week), and the cost pressure on spinning mills needs to be released;
2. India’s domestic weaving, clothing, foreign trade export and other industries have accelerated their recovery, and consumer demand for cotton, cotton yarn, gray fabrics, etc. has rebounded strongly (the Indian Cotton Association predicts that the current production capacity of most textile mills has reached 80%), which will have a positive impact on the second half of 2020. The promising situation of textile and apparel production and export gives yarn mills the confidence to raise their quotations;
3. Affected by the continuous decline of the US dollar index, the exchange rate of the Indian rupee against the US dollar has turned from depreciating to rising (the Indian rupee has (the RMB remains strong), export quotations of cotton, cotton yarn and other products rose passively. Some institutions and investment banks believe that multiple factors will continue to exert greater downward pressure on the U.S. dollar. If the U.S. dollar indexThe number fell below the key level of 91.50, and the downward target will point to 88.70;
Fourth, due to the recent CF2101 contract exceeding 13,000 yuan/ton, the transaction price of reserve cotton and the spot price of cotton have increased together. , some large and medium-sized domestic yarn mills have raised their cotton yarn export quotations, and the price difference between domestic and foreign cotton yarn has widened, stimulating Indian yarn mills and traders to slightly increase their quotations;
5. Some foreign trade companies, Weaving companies are worried that U.S. customer contracts prohibit the use of Xinjiang cotton. In order to reduce unnecessary trouble and losses, they directly purchase imported cotton yarn to avoid risks. </p
