According to sources, a large buyer of Australian cotton in China for many years has recently stopped operating, and forward purchases that have occurred can no longer be honored. A considerable number of Australian cotton orders for 2020 and 2021 have been affected.
In recent years, it has become a norm for cotton merchants to compete for the origin resources of Australian cotton, and the prices quoted are far from the actual psychological price of the factory. Moreover, in the past two years, cotton merchants have shipped unsold cotton to bonded area warehouses in advance, but in fact they have not achieved very good results in the end because China’s demand has significantly reduced. Australian cotton has always been very popular with Chinese yarn mills, but now Chinese textile companies have insufficient operating rates, and the demand for yarns above 50 count is very weak.
In May, Australia’s cotton exports were only 8,759 tons, of which 4,098 tons were shipped to China. From August 2019 to May 2020, a total of 256,600 tons were exported, of which 159,500 tons were exported to China, and exports to Vietnam dropped to 24,000 tons. At present, the cotton harvest in Western Australia has ended. Since there is no ginner locally, the newly harvested seed cotton has to be shipped to Queensland for processing and export. If there is a local processing plant and can be shipped and exported from the Darwin port in the west, the transportation cost will be lower, and more timely and efficient supply can be provided to Indonesia, and the cotton production and marketing in the region will be more developed.
It is reported that there was widespread light rain in New South Wales, Australia, last weekend, and the rainfall will continue this week. The total rainfall is expected to be 10-25 mm. The situation in southeastern Queensland is similar. Overall, Australian cotton-producing areas still need more and heavier rainfall to improve water supply capacity.
Currently, the FOB price basis of Australian origin has begun to fall. With the rise of ICE futures, the basis of Australian cotton origin has dropped to 650 points in 2020 (December 2020 contract) and will fall in 2021. to 875 points (May 2021 contract). The basis difference of Australian cotton SM 1-5/32 Asian CIF price in 2021 is still as high as 1900-2000 points (May 2021 contract), and SM 1-3/16 is 2000-2100 points, which is higher than the same grade of US green card cotton. 500 points or more. </p
