Due to the NCC’s prediction that the intended cotton planting area in the United States will decrease by 5.5% year-on-year in 2020 (significantly lower than the previous data released by the US Cotton Farmers Magazine), the influenza continues to rage in the United States and China purchases 2019/20 Due to the negative impact of U.S. cotton lagging behind due to the pneumonia epidemic, ICE’s main contract continues to oscillate and consolidate within a narrow compartment of 68-70 cents/pound.
Since last weekend, the quotations of bonded, spot and shipping foreign cotton have been lowered with ICE (FOB, CNF), and the January/March shipping EMOT/MOT 41-4, 42-4 (length 32, The quotation of strong 28GPT) fell below 70 cents/pound; the quotation of ME 41-3, ME 42-4, ME 42-3 (length 33, 34, strong 28GPT) was only 70.75-71 cents/pound; and 1/2 The monthly shipping date of Brazil M 1-1/8 (strong 28GPT) is quoted at 77-77.20 cents/pound, and the December/January shipping date of SM 1-1/8 West African cotton (Benin) is quoted at 76.3-77.3 cents/pound. Both prices were reduced by 0.5-1.0 cents/pound compared with last week.
However, what is “very different” from the downward adjustment of ICE and spot external quotations is that the basis price of foreign cotton for port customs clearance has increased rapidly with the sharp rebound of Zheng cotton, and traders’ willingness to clear customs has obviously rebounded. On February 17, the net weight fixed price of S-6 1-5/32 (strong 29GPT) in Qingdao, Zhangjiagang and other places in 2018/19 rose to 13650-13700 yuan/ton; the net weight fixed price of SM 1-5/32 Mali cotton was 13900 -13,950 yuan/ton; the basis quotation of Brazilian cotton M36 (strong 28GPT) in 2019/20 reached 14,000-14,100 yuan/ton, an increase of 100-150 yuan/ton from last week.
Some traders and cotton companies judge that as the COVID-19 epidemic reaches an inflection point, cotton textile companies gradually resume work, and China will restart large-scale contract purchases of US cotton in 2019/20, and other benefits are coming; coupled with the sweeping Locust plagues in countries such as Africa, India and Pakistan may trigger a sharp rise in food prices and the pace of interest rate cuts by the People’s Bank of China is getting closer. Therefore, a short-term pattern of “strong domestic and weak external” has emerged. Zheng Mian will guide the prices of domestic cotton and imported cotton to continue to rebound (CF2005 (will break 13,500 yuan/ton and head towards 14,000 yuan/ton), with reluctance to sell and bullish sentiment continuing to rise.
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