This week, domestic cotton prices rose and fell, and international cotton prices weakened. Cotton yarn prices at home and abroad rose; Polyester staple fiber prices continue to recover.
First, domestic cotton prices rose and fell
On July 31, The General Office of the State Council forwarded the National Development and Reform Commission's "Measures to restore and expand consumption", boosting market confidence, and the first week of the reserve cotton wheel textile factory bidding was positive, and domestic cotton prices were high; On August 3, US time, Fitch downgraded the US sovereign credit rating leading to a collective decline in financial markets, and cotton futures prices fell accordingly; On August 4, the four national ministries and commissions jointly held a conference to study greater policy reserves, and the decline in domestic cotton prices convergence. Overall, domestic cotton prices rose and fell, and the weekly average price was higher than last week. From July 31 to August 4, 2023, the average settlement price of Zhengzhou cotton futures main contract was 17,334 yuan/ton, up 150 yuan/ton from the previous week, an increase of 0.9%; The average price of the national cotton Price B index, which represents the market price of mainland standard grade lint, is 18,008 yuan/ton, up 97/ ton from the previous week, an increase of 0.5%.
Second, the international cotton price shock weakened
This week, the United States high temperature weather continued to spread, ICE cotton in the previous week after the fall has rebounded, but by Fitch ratings downgrade of the United States sovereign credit rating and the recent poor U.S. cotton export data, the international cotton prices as a whole shock weakening trend. From July 31 to August 4, 2023, the average settlement price of the main contract of New York cotton futures was 85.06 cents/pound, down 0.70 cents/pound from the previous week, or 0.8%; The average price of the international Cotton Index (M), which represents the average price of imported cotton landed in China's main port, was 97.17 cents/pound, down 1.08 cents/pound, or 1.1%, from the previous week; Import cost of RMB 16,873 yuan/ton (based on 1% tariff, excluding Hong Kong miscellaneous and freight), down 248 yuan/ton from the previous week, down 1.4%. The domestic cotton price is 1135 yuan/ton higher than the international cotton price, and the price difference is 345 yuan/ton larger than the previous week.
Third, the price of cotton at home and abroad has risen
This week, the textile market inquiry activity has increased, some traders narrow the bargaining space, domestic cotton yarn prices continued to rise slightly. Trading in the yarn market is still weak, and the price of yarn continues to rebound with raw materials. Domestic cotton prices rise with the price of raw materials. Polyester staple fiber prices continue to recover.
Fourth, future market outlook
The wave of US bond issuance has intensified the turmoil in the financial market, and international cotton prices are facing large fluctuations. To counter the worsening fiscal deficit and continue to provide a cash cushion, the US Treasury said in a statement on July 31 that it expected net issuance of marketable debt in the third quarter to reach $1,007 trillion, a record high for the same period and $274 billion higher than its estimate at the beginning of May. With the issuance of medium - and long-term bonds by the US Treasury, the liquidity of the US banking system is facing more severe challenges. Cotton city, as of July 30, the United States cotton growth condition reached more than 41%, down 5 percentage points from the previous week, 3 percentage points higher than the same period last year. In the textile market, the July survey report of the International Textile Manufacturers Federation showed that although the order volume increased slightly in July, the textile factory, printing and dyeing and finishing parts were negative news. In the short term, affected by the turmoil in the international financial market, continued low consumption and changing weather conditions, international cotton prices are expected to fluctuate significantly.
The textile market shows signs of improvement, the reserve cotton round is active, and the domestic cotton price is supported by consumption. According to the data of the National Bureau of Statistics, in July 2023, China's manufacturing PMI was 49.3%, up 0.3 percentage points from the previous month, and the level of manufacturing prosperity continued to improve, but it was still in the contraction range. On August 4, the National Development and Reform Commission, the Ministry of Finance, the People's Bank of China and the State Administration of Taxation jointly announced that they will play a combination of macro-control to promote high-quality economic development. In terms of cotton market, the high temperature weather in Xinjiang is still continuing, according to Aksu cotton processing enterprises, the current weather is conducive to accelerating cotton growth, and hand-picked cotton in southern Xinjiang is expected to be picked one after another around the end of August. Recently, after the orderly launch of the reserve cotton wheel, the bidding of textile mills has been active, and the supply of cotton in the market before the New Year has been guaranteed. Recently, the textile market inquiries have increased, domestic sales orders as a whole have not improved significantly, and some foreign trade enterprises have increased orders in small batches, especially the home textile market orders have turned better. In the short term, the improvement of the domestic textile market will provide certain support for cotton prices.