According to the Australian Agricultural Resources Economic Research Bureau, Australia’s cotton production in 2020 is only 134,000 tons, and most of the Australian cotton in 2020 has been sold to China in advance. Currently, Australian farmers and exporters have few quotes.
Cotton traders in Qingdao, Zhangjiagang, Shanghai, Guangzhou and other places believe that Australia’s The basis difference between cotton SM 1-5/32 and GM 1-5/32 has reached 2300-2500 points, which is significantly higher than that of US cotton, Brazilian cotton, and Ukrainian cotton. Moreover, Sino-Australian relations continue to deteriorate, and Australian high-quality cotton is “good wine”. Not afraid of deep alleys”, it is still “booked” by Chinese buyers on a large scale, which is somewhat unexpected.
So which Chinese buyers are signing large-scale contracts to purchase Australian cotton in 2020? Judging from feedback from some cotton companies and the author’s survey, the main aspects include the following:
First, the procurement by the Chinese branches of some large and medium-sized international cotton trading companies. In recent years, Australian cotton exports have been mainly monopolized by three or four foreign businessmen and several Australian processing and export companies. The procurement, transportation and sales of these international trading companies are mainly operated through their companies registered in China;
The second is that some Chinese trading companies purchase goods, but they mainly purchase goods from Australian processing and export companies for “secondary” operations. The reason is that the basis of Australian cotton quotations is not only 100 lower than that of international cotton merchants. The contract deposit, payment method, etc. are relatively flexible and can be negotiated between the buyer and the seller; however, there are occasional problems with cotton quality and contract execution (not as “reliable” as international cotton merchants);
Third, a small number of Chinese cotton textile companies with import quotas within the 1% tariff have locked in Australian cotton resources in advance. On the one hand, some export-oriented textile and clothing companies are “fans” of Australian cotton and highly recognize the quality, spinnability, consistency and other indicators of Australian cotton; on the other hand, some order contracts for exports to Europe, the United States, Japan and South Korea clearly require the use of Australian cotton. Australian cotton. Of course, the main body of Australian cotton resources in 2020 is cotton traders, and the number of direct orders placed by textile enterprises is relatively small.
On July 6th and 7th, although the quotations of Australian cotton for June/September shipping dates in Qingdao and Zhangjiagang were not high, the quantity supplied by traders was relatively large, generally reaching 3,000- 5,000 tons, indicating that Australian cotton resources will be monopolized by large cotton trading companies in 2020, and there are not many opportunities for small and medium-sized cotton merchants to participate, operate, and “move bricks”. SM 1-5/32 Australian cotton basis is stable at 18.5-19.5 cents/pound (ICE2007+ basis); although some trading companies still set the basis at 21-22 cents/pound, few textile mills and middlemen Make inquiries and place purchase orders. </p
