[ Industry Outlook ] Cotton prices broke through before the high, some textile companies order schedule to March after the Spring Festival can cotton prices continue to rise?

Recently, Zheng cotton main contract breakthrough before high. The downstream part of the factory began to holiday, in order to reduce the risk of raw material cost, the cotton factory purchase intention is low, and the goods are smooth. As the Spring Festival approaches, replenishment enterprises have entered the final stage of taking goods, and new orders are limited.

Market review

Internationally, last week, US cotton prices rose sharply, breaking through 85 cents, once again hit a new stage high, mainly affected by the Federal Reserve monetary easing expectations and the stock market and other macro factors, but Friday by the impact of the weekly export data fell sharply, prices fell sharply, later still need to continue to pay attention to US cotton exports.

In mid-January, the main contract of Zheng cotton was consolidated around the 15500 axis for a period of time. On January 18, Zheng Mian rose sharply, and took this as a whole to a step up. However, in late January, cotton prices did not further expand the increase, but in the new platform to carry out shock finishing, the trading axis from the middle of 15500 moved to 16000.

Entering January, the improvement of textile orders led to a round of enterprise replenishment, although the Spring Festival holiday is approaching, the replenishment is basically completed, but the enterprise is optimistic about the future market, Zheng Mian performance is strong shock. However, cotton prices are still relatively limited under the influence of these beneficial factors. Zheng Mian continued to shake near the six thousand pass, indicating that the game between the two sides in this position is more intense. From the Xinjiang cotton cost calculation, the current price has been close to the cost of new cotton in southern Xinjiang, some of the acquisition of low processing costs of enterprises have hedging space, if the price continues to rise, Zheng cotton is undoubtedly facing greater hedging pressure. Therefore, at the key pressure level of six thousand, the main contract of Zheng cotton repeatedly shook.

Approaching the New Year, the operating rate of downstream textile enterprises is stable and declining. This year, most of the downstream cotton textile enterprises have a normal holiday, and the holiday time of a small number of enterprises with tight order delivery time will be shortened. In general, including textile enterprises and weaving enterprises have basically completed the replenishment of raw materials, and the number of enterprises that continue to replenish a large number of inventories is not large, basically cautious just need to replenish the inventory. In the case of gradually weakening consumption, it is unlikely that cotton prices will continue to rise significantly. On January 31, the main contract of Zheng cotton closed at 16,085 yuan/ton, down 15 yuan/ton from the previous day.

Businesses are beginning to take holidays

As the end of the year approaches, many textile enterprises have been on holiday, migrant workers have also begun to return home, and the upstream and downstream basically enter the end of the year. According to cotton trading enterprises in some areas, the cotton enterprises and middlemen who have placed orders since this week have significantly reduced compared with mid-January, because a large proportion of small and medium-sized cotton textile factories have entered the pre-holiday state, and raw material inquiries and purchases have gradually stopped (including port bonded cotton, ship cargo, etc.). Some cotton companies have also begun to reduce pending orders and reduce quotations, waiting for the start of the market after the year. At present, the overall market is still in a weak position, the dilemma of insufficient demand for the industrial chain has not yet emerged, and the sustainability of production orders is difficult to guarantee.

Generally speaking, there is often a small peak season of demand before the Spring Festival, and the market also reflects that some external demand orders have been placed some time ago, and the textile factory's demand for cotton procurement is good. After a period of continuous replenishment, the raw material inventory of the textile factory has reached a high level, and the demand for cotton before the Spring Festival has weakened, but the overall situation is OK. The biggest concern of the market for the future market is still the continuity of demand, after all, it is now the peak of new cotton supply, cotton supply is sufficient, recent imported cotton is also a large number of continuous to Hong Kong, the overall supply of cotton raw materials is abundant.

Cotton prices may still rise after the holiday?

In January, due to the centralized stocking of the downstream textile market, the cotton yarn inventory of textile enterprises was significantly reduced, and the output profit improved, or to provide potential space for subsequent cotton consumption. According to the research of relevant agencies, since January, high-count yarn has been selling well, and some textile enterprises' order schedules have reached March. Therefore, before the arrival of the "gold three" demand season, most practitioners are expected to improve the consumption of the downstream market, and it is expected that the cotton market demand is still possible after the Spring Festival, when the domestic cotton price or the continuation of the strong trend. In addition, some high-cost cotton cotton enterprises are still in a floating deficit situation, temporarily difficult to enter the market, in the short term will also provide support for the domestic cotton market.

(Information source: China Yarn Network)