According to feedback from cotton trading companies in Qingdao, Zhangjiagang, Shanghai and other places, although ICE and Zheng cotton have risen, several international cotton merchants and import companies have lowered their quotations for shipping schedule cotton, bonded cotton and customs clearance cotton (customs clearance cotton : CF2009 + basis), but the inquiry and shipment situation has not improved much, especially for medium and high quality Brazilian cotton and Indian cotton.
According to the survey, as of now, Brazilian farmers have about 150,000 tons of 2019 old cotton that has not been sold; traders and export companies also have part of the inventory; plus the real against the US dollar The continued depreciation and the raging COVID-19 epidemic in Brazil have led to a sharp decline in domestic cotton consumption. Therefore, as the countdown to the launch of new cotton in 2020 begins, Brazilian cotton has fully begun a pattern of falling basis points. Moreover, the greater the increase in ICE, the lower the basis point of Brazilian cotton. Also bigger. On July 5th and 6th, the basis spreads of M 1-1/8 and SM 1-5/32 for the 9/12 shipping schedule in China’s main ports were 8.25-9.25 cents/pound and 9.5-10.5 cents/pound respectively, which were higher than In mid-June, the basis difference of Brazilian cotton dropped by 3-4 cents/pound.
There are four main reasons for the downward pressure on cotton prices in India: First, the epidemic in India is “uncontrollable” and the trend of plummeting domestic cotton consumption continues; second, CCI inventory exceeds 10 million bales (other than (nearly 2 million tons), considering that it still needs to be purchased at the MSP price in 2020/21, so despite repeated reductions in sales prices, cotton textile mills and exporters still do not buy it; third, the southwest monsoon not only did not break the appointment, but also appeared a week early As of the end of June, India’s cotton sown area has increased by 165% year-on-year, and cotton production prospects are optimistic. Fourth, the Sino-Indian border conflict has caused Chinese textile companies and traders to be very cautious about signing contracts to purchase Indian cotton.
Why are Brazilian cotton and Indian cotton trading cold again? The author’s views are summarized as follows: First, since July 1, the central reserve cotton rotation has effectively supplemented the domestic supply of medium and low-quality cotton, and the shipments of some low-grade and low-index Indian cotton and Brazilian cotton have been squeezed; other 2. Since mid-April, China has signed a large number of contracts to import U.S. cotton for the 2019/20 and 2020/21 seasons, with large arrivals and delivery volumes in July, August, and September, increasing opportunities for cotton-using companies to choose; third, China Inspection and quarantine requirements for Brazilian cotton and Indian cotton from epidemic areas are becoming more and more stringent; fourthly, as domestic sales orders enter the off-season in July/August, the consumer demand for OE yarn and cotton yarn with counts of 21S and below has declined (joint production restrictions) , the proportion of cotton mills and cloth mills that have reduced production is relatively high), and the procurement of medium and low-quality cotton has declined. </p
