Half a month later, the domestic cotton market is about to enter the new year. Cotton is processed in one season and uses important agricultural products throughout the year. Its production and marketing seasonal characteristics are obvious. Seeing that new cotton is about to be launched in September, both cotton manufacturers and traders have begun to take stock of existing inventory and funds to ensure the steady progress of work in the new year.
Recently, some traders have reported that in order to prepare enough funds for the operation of new cotton, they have begun to clear their warehouses. Although the current demand from most textile companies is not high, they are still trying to find ways to increase the digestion quantity. Some companies try their best to select matching resources based on the grade and quantity of cotton used by their buyers, and strive to achieve their goals through targeted search for old customers, packaging and profit transfer.
Based on the current quantity of goods held, different trading companies vary greatly. Some companies have completed inventory clearance, while others still have nearly 10,000 tons of inventory. Not many companies have completed inventory clearance. Most companies have maintained a small amount of inventory due to large price fluctuations in the past two years to avoid risks. Judging from the spot holding indicators, the current remaining spot stocks in 2019/20 are basically Xinjiang cotton, with lengths of 28-29 and strong strength of 26-27. The basis range ranges from 700 to 1,000 yuan/ton (inland warehouses, for the CF2009 contract).
According to a survey of textile enterprises, it is still difficult for cotton yarn to be shipped smoothly recently, and since June, the price of some varieties of cotton yarn has dropped significantly. The current high price of lint raw materials is really unacceptable. Therefore, it is difficult for textile companies to destock their warehouses and for cotton companies to clear their warehouses, which has become an important “dilemma” that restricts the current smooth digestion of lint cotton.
Although the road to selling cotton is extremely difficult, some cotton merchants said that they have made some progress in handling inventory through grading promotions, futures arbitrage and other methods. The new year is about to begin, and both textile companies and traders will continue to shift their focus to new cotton. With the post-epidemic period, the market is gradually recovering, and there is full hope for a recovery in the market outlook. Some companies also said that a rebound in the future cotton market is a high probability event, so from the perspective of spot value appreciation, as long as funds are sufficient, there is no rush to sell goods.
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