Price drop increases cotton market outlook is not expected

After the price of cotton dipped from the 34,000 yuan/ton high station in the first quarter of this year, more and more news began to spread in the cotton market and suppress its price increase. For example, some export processing textile enterprises stopped production and restricted production, and textile export growth slowed down. In the last two months of the 2010/2011 cotton season, news that the new cotton was growing well and was expected to be a good harvest has become the driving force behind the continued downward pressure on cotton prices.

According to Wang Qiang, a senior cotton spinning professional analyst, the cotton price trend is confused. According to the calculation of planting costs, cotton seems to have fallen. Affected by the increase in apparel prices, domestic and foreign markets are consuming lightly and the outlook is unpredictable.

In the following year, cotton production will increase by 20%. As a large-scale textile company in Weiqiao, Shandong Province, recently lowered the purchase price of lint, panic sentiment spread throughout the cotton spinning industry chain. The latest data shows that the fourth-grade lint price has dropped to 18,500 yuan/ton, and the price of seed cotton purchased by cotton traders from cotton growers fell from the highest of 7 yuan/kg in November last year to the current 3-4 yuan/kg.

It takes about 2 months for Xinmian to go public. According to Dongxing Research Report, at present, new cotton in the Xinjiang and Yellow River basins is growing well and there are clear signs of high yields. In parts of northern Xinjiang, new cotton is expected to begin listing around mid-August. In Shanxi and Shaanxi, a small amount of new cotton is expected to be listed in the middle and late August.

Recently, China Reserve Cotton Management Corporation stated that the increase in acreage and yield will boost domestic cotton production this year, and domestic cotton production in 2011/2012 is expected to reach 7.4 million tons, an increase of 18.6% over the previous year. The inventory did not go and the new cotton arrived again. Make the market generally bearish on cotton prices. Ironically, at about this time last year, the market started its first round of mad speculation on cotton prices on the basis of the large supply and demand gap.

It is unlikely that cotton prices will return below 20,000. On July 20th, Wang Fuxian, a senior researcher of the cotton spinning industry and chief editor of the First Textile Network, summarized the 2010/2011 cotton year and forecasted future cotton prices.

Wang Qianjin believes that from the point of view of global cotton reserves and rigid demand, even if the cotton output in the new year is increased, the reserves can still not reach the highest level in history, and the demand gap still exists. In addition, according to a statistical survey on cotton planting, it is expected that the total cost per mu in cotton in 2011 will be 1490.5 yuan, which is 22.32% higher than that in 2010.

This reporter learned that, in terms of cost, the purchase price of seed cotton in 2011 should be above 4.5 yuan/kg, according to the price of cottonseeds 2 yuan/kg, processing fee 500 yuan/ton, then the corresponding price of lint cotton is about 21,000 yuan/ton. Therefore, it is considered unlikely that the cotton price will fall below 20,000 for a long period of time. If the cotton price drops below 20,000 yuan/ton, the cotton enterprises may instead consider buying in batches strategically.

Wang Qianjin believes that the surge in cotton from last year to the first quarter of this year has suppressed downstream consumer demand. At the same time, the development of the U.S. economic situation this year is lower than expected, and the European debt crisis has spread. The export situation of China's foreign trade textiles is more complicated. Coupled with unfavorable factors such as the price of crude oil, raw material prices, rising labor costs, and price increases caused by export products, the possibility of long-term cotton prices at a level above 20,000 yuan is relatively high, and 25,000 yuan/ton may become the next few. The new value center of cotton prices in the year.