Watch improvement in textile orders
At present, although cotton prices in the mainland are relatively strong due to the obstruction of cotton transportation out of Xinjiang, the rebound in cotton prices is not large due to the drag of demand, and it is still necessary to wait for the slow recovery of terminal demand.
Since the second half of the year, as the U.S. Department of Agriculture has adjusted the U.S. cotton production forecast, the recentZheng MianThe futures price continued to rebound from the low of 12,270 yuan/ton and returned to above 13,500 yuan/ton. So, is the cotton price that has been weakening all the way starting to fight back? In fact, it is not the case. Although the cotton price has a strong upward trend, the rebound rate is not large. Compared with the US cotton, the overall fluctuation is small.
The weather in Xinjiang is good this year, and the production of new cotton has increased.According to the countrycottonAccording to the survey of the market monitoring system, the total cotton output in 2022/2023 is expected to be 6.032 million tons, a year-on-year increase of 4.0%. The cost of cotton planting has increased significantly this year. If calculated on the basis of 400 kg of seed cotton per mu, the break-even point of cotton farmers is 7.5 yuan/kg, so cotton farmers are more reluctant to sell. However, the cotton ginners have learned the lessons of the previous year, are more cautious in purchasing and pricing, and the overall scale opening time has been delayed. As of November 17, the national new cotton picking progress was 95.3%, and the sales rate was 84.3%. At present, although the acquisition of new cotton in northern Xinjiang has come to an end, the acquisition of new cotton in southern Xinjiang is progressing slowly. The amount of seed cotton purchased by each ginning factory is different. Some ginning factories have relatively sufficient purchases, while others are facing difficulties in harvesting cotton. The overall purchase progress is significantly delayed compared with previous years.
At present, the average purchase price of machine-picked cotton in Xinjiang is 5.8-6.1 yuan/kg. According to the publicity of cotton target price reform and processing enterprises in Xinjiang in 2022, there are 753 publicized companies in the autonomous region and 300 companies in the Corps in the new year. The average purchase price is generally stable with little fluctuation. At the same time, according to the statistics of the national cotton trading market, as of November 22, the total amount of lint cotton processed in Xinjiang was 2.1374 million tons, a year-on-year decrease of 28.89%, while the national cotton notarized inspection volume was 800,700 tons, a year-on-year decrease of nearly 70%. Although the speed of notarization inspection has been accelerated, the overall progress is still significantly behind.
At present, the freight rate of Xinjiang cotton road remains high. For example, the average freight rate from Kuitun to Henan and Shandong exceeds 850 yuan/ton, and the average freight rate from Korla to Shandong is even close to 950 yuan/ton, a large increase. Although the transportation volume has increased recently, it is only limited to certain regional warehouse shipments, and the transportation volume in most other regions is still small. Therefore, with the gradual increase in the amount of new cotton on the market, as of the end of October, Xinjiang’s cotton commercial inventory reached 1.8655 million tons, an increase of 462,600 tons from the previous month, but only 338,800 tons remained in the mainland, which continued to decline from the previous month, far below the level of the same period last year. Most of the textile enterprises also mainly purchase resources from the mainland, and the low inventory in the mainland is also a major support point for the recent rise in cotton prices.
From the demand side, on the one hand, the first batch of reserve cotton rotation policy stopped on November 11. my country Reserve Cotton Management Co., Ltd. purchased and traded a total of 86,720 tons of cotton, with a transaction rate of only 17.25%. The transaction volume is far less than the planned rotation volume of 300,000-500,000 tons. The policy effect on boosting cotton prices is limited. Waiting for the follow-up cotton storage Choose an opportunity to start the second batch of rounds. On the other hand, the consumption peak season in the first half of the year was not busy. As the market situation improved, the downstream demand improved slightly but was still not good. During the off-season of the textile industry, the downstream is generally facing the problem of order shortage. Subsequently, the profit of spot spinning continued to improve, which could guarantee a certain profit. With the arrival of the peak season of “Golden September and Silver October”, downstream demand has improved month-on-month, and the retail sales of textiles and clothing nationwide have increased month-on-month. After the impact of high temperature and power cuts has been lifted, the operating rate of gauze factories has steadily rebounded, and the enthusiasm for raw material replenishment has increased. However, as new cotton is approaching the market, textile enterprises are more worried about the fluctuation of cotton prices in the future market, and their purchases are relatively cautious. In October, the growth rate of domestic retail sales slowed down again, the inventory of raw materials in spinning mills fell again, and the storage of downstream finished products was slow. Judging from the order situation, most of them are still bulk orders and small orders, and the order queuing period is relatively short. Some small factories are beginning to face the problem of order shortage, and the operating rate fluctuates. On the whole, the seasonal demand for autumn and winter orders has improved, but the recovery is limited. In November, the textile industry re-entered the off-season, the downstream orders were generally insufficient, and the lint inventory of textile enterprises was at a historically low level, but the strategy of purchasing raw materials was still maintained. At present, due to the poor transportation of cotton out of Xinjiang, there is a price difference between the prices of inland cotton and Xinjiang cotton, and the price of resources in the inland warehouse is slightly higher.
In addition to domestic sales, due to the unfavorable global economic environment, the weakness in export sales became more apparent in the second half of the year. Since August, my country’s textile and clothing exports have fallen ahead of schedule, the import demand for cotton products in Europe and the United States has weakened month-on-month, textile and clothing sales have declined, and clothing continues to accumulate. In September, the US apparel retail inventory increased by 24% year-on-year, and the inventory of wholesalers increased by nearly 70% year-on-year. Although Christmas is approaching, downstream orders have shrunk significantly year-on-year, and the start-up rate in Southeast Asia has also continued to decline. The overall textile industry is in a bad mood, and purchases and sales are flat.
On the whole, the national cotton supply is abundant in the new year, and domestic demand may recover slowly, but external demand is still weakening. Only when the inventory of finished products in major textile and apparel consuming countries such as Europe and the United States begins to fall, will it be possible to drive orders from textile and apparel producing countries such as Southeast Asia and China. improve. At present, although affected by the obstruction of cotton transportation out of Xinjiang, the cotton price in the mainland is relatively strong, but dragged down by demand, the upward momentum of cotton price is insufficient. It is necessary to continue to wait for the slow recovery of terminal demand before ushering in the “spring” of the cotton textile industry. (Author unit: Nanhua Futures)
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