According to reports from some domestic cotton traders and cotton textile companies, as the domestic quotation basis of Australian cotton dropped from 1400-1500 points to 850-900 points in early June, the quotation basis of Brazilian cotton in 2020 and 2019 has also increased recently. The price has been lowered significantly, with an amplitude of 300-400 points. The intention to compete with the US cotton and Australian cotton global markets is clear.
An international cotton company in Qingdao stated that in the past two years, the proportion of Brazilian cotton length 1-5/32 (36, 37) has increased significantly, the breaking strength is generally 28GPT and above, and the horse value is higher than that in the previous period. Cotton and U.S. cotton have some advantages. Therefore, some cotton textile mills and traders in China, Vietnam, Indonesia and other countries recognize the spinnability and consistency of Brazilian cotton. The demand is stable, and Brazilian ginners and export companies have the confidence to compete with U.S. cotton. Compete. However, it is worth noting that logistics problems at the Port of Santos in Brazil have been prominent recently, and most Brazilian terminals are not protected by shelters, which affects shipments on rainy days. Therefore, when signing a contract, you need to pay more attention to changes in Brazilian cotton shipping schedules and transportation prices.
Why does Brazil’s FOB quotation basis decrease continuously? The author’s analysis mainly includes the following factors (not discussing the high original basis difference): First, according to the first phase of the China-US trade agreement, it is difficult for Chinese buyers to apply the “brake” on the contract purchases of US cotton in 2019/20 and 2020/21 in the short term. , or directly seize the market share of Brazilian cotton in China; second, the Brazilian cotton production will reach a new high in 2020 and the global cotton consumption will be significantly reduced due to the new crown epidemic. CONAB estimates that Brazil’s cotton planting area in 2019/20 is 1.671 million hectares, and its output is expected to be 2.879 million tons, a year-on-year increase of 3.6%, both record highs; third, the spot and MCX futures prices of Indian cotton, another major export competitor, in the past month or so The market continues to fall, and Brazilian cotton’s exports to China, Vietnam, Indonesia, etc. are threatened to a certain extent; fourth, the current outbreak of the new crown epidemic in Brazil (the second wave is coming one after another), has a negative impact on Brazil’s trade, economy, transportation, export, etc. The impact was huge. According to statistics, as of 17:00 local time on June 22, a total of 1,106,470 cases have been diagnosed in Brazil, with nearly 60% of the confirmed cases concentrated in small and medium-sized cities. The impact on cotton harvesting, processing, and transportation in 2020 is self-evident. </p
