Cotton Market Dynamics and Aftermarket Forecast
Author: Jul 05, 2011 15:57
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Cotton price in this hot June seems to floating snow, cooling down once and again. Cotton merchants sell out lint cotton in panic, but the turn over is still low. The whole market is overwhelmed with a depressed atmosphere. As for the downstream high cotton inventory plants, have a low demand for cotton. The market is still bearing a certain pressure. The overall wait and see attitude is strong and cotton price will continue to fall.
Cotton price fluctuate in small degree, overall go down.
Domestic cotton price fluctuate in small degree, the price is mainly around 24000CNY. The drop amount is minimized, however, the wait and see attitude is still overwhelmed the market, and real trade is rare. Price out abroad hit the peak and fall back, continue to narrow down the price difference with domestic cotton price. The main reason is the economy decline and demand decrease.
 By now, China cotton price index CC Index 328 grade index is 24056CNY/t, dropped 439CNY/t, which is relatively small in compare with the beginning of the month.
See from cotton fundamentals, the domestic commercial cotton inventory amount is 2190 thousand ton, 370 thousand ton less than the end of last month, which was 2560 thousand ton. See from inventory trend, although procurement of weaving plants is still low, inventory remove speed is slower than that of last year, for new cotton has not yet come into the market, inventory will continue to decrease. For kinds of unfavorable factors, cotton price will fall once and again.
Weather factor cumber cotton supply
Recently, for the flood and droughts in the Yangtze River area, greatly influenced cotton growth, but still under the control range. American cotton cultivation zone recently also suffers from severe weather. Part of the cotton field damaged, greatly influence cotton out put.
In North China, new cotton may come into the market in the middle term of August. Lint cotton price is estimated around 20000-22000CNY/t. Some weaving plants even abandon the inventory cotton and wait for the new cotton come into the market. On cotton price, there are various factors, of which the weather factor becomes the main speculation subject, which will greatly influence cotton price trend.
Poor cotton yarn digestion
Cotton price continue its weak trend this month. High inventory plants, cotton demand slack. According to survey, cotton yarn price has rose for 28 days in a row, which is close to the peak in 2008. In order to reduce stock pressure, some weaving plants had to lower down price to do sales promotion, but still the market turn over is low. Mainly for the below two reasons: firstly, under the stock pressure, and influenced by cotton yarn price fall, the overall fall trend is unchanged. Now 32s mainstream quotation is at 30800CNY/t, dropped 1300CNY. 40s was quoted at 32100CNY/t, dropped 1400CNY/t. J32S was quoted at 36600CNY/t, decreased 1800CNY. Although the price is falling continually, the market turn over is still low, and inventory pressure in the weaving plants has not eased, cotton yarn digestion is not good. In my opinion, in order to break the deadlock of cotton textile industry chain, the downstream weaving plants had to be pressure reduced.
 Cotton industry is depressed.
The overall textile industry has stepped into the throughs, high financial pressure, some small and middle sized enterprise has to go bankrupt, low demand, and the reduced production for the bankrupt, making the overall cotton weaving industry even depressed.
No favorable factors of the Macro environment
To sum up, domestic inflation, interest raise, import tariff lower down and etc are all unfavorable factors for cotton market. High inventory plants keep a low demand for cotton. The overall market is still bearing pressure. Therefore cotton price in the near future will still fluctuate, the price will continue down ward.
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Editor: Candy From: 168Tex.com
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