The “mystery” behind the floating cotton futures

[168TEX News] After the long National Day holiday in October, the cotton futures market of Zhengzhou Commercial Exchange continued to maintain the pre-holiday level, showing a trend of range fluctuations, mostly hovering around 12,200 yuan/ton; in the second half of the month, the futures market prices plunged downwards The pattern once fell to below 12,000 yuan/ton, but the market rebounded slightly towards the end of the month. As of the end of October, the main 1601 contract closed at 12,135 yuan/ton. Compared with the price in the same period last month, it dropped by nearly 135 yuan/ton, or 1.10%; its trading volume fell back to 31,012 lots, and the position dropped to 229574 lots. So what is the “mystery” behind the ups and downs of the Zheng cotton futures market in October?


When talking about the cotton futures market, the first thing that naturally needs to be paid attention to is the cotton spot market. The cotton spot market in October showed a trend of rising first and then falling, with prices rising slightly towards the end of the month; however, the overall price focus was still slightly lower than last month. From the specific price point of view, as of the end of October, the average price of 2227B grade cotton to the factory was 11,872 yuan/ton, which was slightly lower than the price of the same period last month by 20 yuan/ton; in addition, the average price of 3128B grade cotton to the factory was concentrated. At 12,835 yuan/ton, it is basically the same as the price at the end of last month; while the average factory price of 2129B grade cotton is around 13,545 yuan/ton, which is slightly lower than the price in the same period last month by 16 yuan/ton. Specifically, the cotton spot market is still quite divided. It is difficult to inquire for prices of high-grade cotton, while low-grade cotton ginners are unwilling to purchase and process it. However, as seed cotton picking in some areas gradually comes to an end, it will end in mid-to-early November. Cotton farmers’ shipping mentality has increased slightly, and the market outlook may consider reducing prices to alleviate inventory.


Faced with the structural shortage of high-quality cotton in China, some textile companies have called for the issuance of targeted cotton quotas to increase the import of good-quality cotton for use. So what is the recent situation of imported cotton? At present, the overall price focus of imported cotton is on the rise; as of the end of October, Indian cotton Shankar-6 1-5/32 was quoted at 66.8 cents/pound, with a discount of 13,506 yuan/ton under quasi-tax, and a 1% quota. Under the tariff, the self-pickup quotation at the port is 10,909 yuan/ton; compared with the price in the same period last month, it increased slightly by 39 yuan/ton. In addition, the US cotton EMOT SM quotation fell by 0.25 cents to 74.75 cents/pound, and the quotation under the discounted standard tax was 14,200 yuan/ton; the port self-pickup quotation under the 1% quota tariff was 12,183 yuan/ton, which increased compared with the price in the same period last month. 331 yuan/ton. The Uzbek SM price is 78.4 cents/pound, which is 14,548 yuan/ton under discounted standard tax; the port self-pickup price under 1% quota tariff is 12,768 yuan/ton, an increase of 457 yuan/ton. In terms of foreign cotton, as of the 29th, the New York cotton futures December contract closed at 62.32 cents/pound, and the March contract closed at 62.21 cents.
Of course, the downstream yarn market conditions are also another key factor affecting futures trends. In the recent period, the downstream yarn market has continued to undergo a weak adjustment pattern, and the overall operating situation of yarn mills is not ideal. Relatively speaking, the operating rate of large mills has remained at around 70% to 80% with stable orders, but the operating rate of small mills has remained at around 70%. There are more shutdowns, more production to order, and low inventory operation. The market outlook may continue to decline. Specifically, the polyester-cotton yarn market showed a consolidation trend, and the actual transactions were mostly discounted based on the actual order size. The overall transaction volume was not large, the inventory increased slightly, and the pressure gradually emerged. In terms of pure cotton yarn, the market continues to run smoothly, and the price center of gravity fluctuates little. However, market transactions are still difficult to increase volume. The specific transaction volume is still concentrated in 32S and 40S, mainly due to relatively good production demand for the air-jet nylon cotton series; some manufacturers have inventories. Digestion is slow and cash purchase orders are insufficient. The market trend of rayon yarn is still average. Relatively speaking, the sales volume of 10S and 30S is acceptable. The product inventory of yarn manufacturers is concentrated in about 20-30 days. It is expected that the price may still adjust in the short term.
Generally speaking, whether it is the cotton spot market or the downstream yarn market, the later market is mostly relatively bearish and wait-and-see dominates; for the futures market, it has also fallen into a “frog boiling in warm water” situation, and the market is not lukewarm. The fire atmosphere is quite difficult, and I am even more confused about the future trend. <br /