Market Observation: At Present, Cotton Yarn Prices At Home And Abroad Continue To Fall, And Cotton Stocks Are Still Sufficient

Last week, the operating rate of textile enterprises dropped slightly before and after the May Day, and the enthusiasm for cotton replenishment was not high. The emergence of cotton in Xinjiang cotton producing areas was relatively smooth, and the overall domestic cotton price fluctuated slightly. The average settlement price of the main contract of Zhengzhou cotton futures was 12868 yuan/ton, down 4 yuan/ton from the previous week, basically flat; The average price of national cotton price B index, which represents the market price of standard lint in the mainland, is 14106 yuan/ton, down 37 yuan/ton or 0.3% from the previous week.

On the international market, the news that China and the United States are about to officially contact on the tariff issue has a certain role in boosting the market. However, as the planting of American cotton continues to accelerate, the growth and harvest of Brazilian cotton and Australian cotton are generally progressing well, and the expectation of abundant market supply remains unchanged. In addition, the number of American cotton export contracts decreased significantly last week, and the international cotton price continued to fall after surging, with the average price still higher than the previous week. The average settlement price of the main contract of cotton futures in New York was 67.39 cents/pound, up 0.56 cents/pound from the previous week, or 0.8%; The international cotton index (M), which represents the average CIF price of imported cotton in China's main port, is 75.99 cents/pound, which is converted into RMB 13304 yuan/ton of import cost (calculated by 1% tariff, excluding port sundries and freight), an increase of 75 yuan/ton or 0.6% over the previous week. The domestic cotton price is 802 yuan/ton higher than the international cotton price, 111 yuan/ton smaller than the previous week.

Cotton yarn prices at home and abroad continued to decline. The average price of domestic C32S combed pure cotton yarn was 20368 yuan/ton, down 80 yuan/ton from the previous week, or 0.4%; The average price of conventional outer yarn was 21740 yuan/ton, down 12 yuan/ton or 0.1% from the previous week. The average price of conventional outer yarn is 1372 yuan/ton higher than that of domestic yarn, 72 yuan/ton higher than that of the previous week. The price of polyester staple fiber was 6336 yuan/ton, down 7 yuan/ton or 0.1% from the previous week.

The expectation of supply easing was strengthened, the geopolitical situation was turbulent, and the rebound momentum of international cotton prices was insufficient. The cotton planting in the United States was smooth, and the disturbance of the early dry weather on cotton prices continued to weaken.

As of May 4, the cotton planting rate in the 15 major planting states in the United States was 21%, 1 percentage point higher than the average in the past five years. Among them, the planting rate in Texas, the main producing region, was 25%, and the planting progress was fast. According to foreign media, as the per unit yield of Australia's irrigated cotton fields is far higher than that in previous years, the total cotton output may exceed the previous estimate, and the expectation of loose supply is enhanced.

Recently, the conflict between India and Pakistan has rapidly escalated and triggered mutual sanctions. The crisis of water resources and electricity may affect Pakistan's cotton yarn production. Considering that Pakistan is the second largest export destination of American cotton this year, if the conflict escalates, the consumption demand of American cotton may shrink.

In addition, the global trade negotiations have entered a critical period. Vice Premier He Lifeng of the State Council held talks with U.S. Treasury Secretary Vincent Besant during his visit to Switzerland on May 9-12; The European Commission claims that it may take countermeasures against US goods worth 95 billion euros and continue to seek mutually beneficial and balanced solutions with the United States; The United States and Britain reached agreement on the terms of the tariff trade agreement. It is expected that the market will remain on the sidelines of international trade negotiations, and international cotton prices may remain volatile.

The domestic cotton yield expectation is getting stronger, the downstream market has entered the off-season, and the country has issued a package of financial policies to stabilize expectations. On May 7, the Information Office of the State Council held a press conference. The People's Bank of China, the State Administration of Financial Supervision and Administration, and the China Securities Regulatory Commission announced a package of financial policies, including interest rate and reserve ratio cuts, the establishment of service consumption and pension refinancing, the improvement of the real estate financing system, and the issuance of important reform measures for public funds, to release a strong signal of stabilizing the market.

The Ministry of Industry and Information Technology and the Ministry of Commerce issued a notice on launching the 2025 textile and clothing "optimizing supply to promote upgrading" activity, which will plan to hold 20 docking activities, promote the integration of domestic and foreign trade in textile and clothing, and help promote the effective connection between upstream and downstream of the cotton textile industry chain. In terms of cotton market, the continuous rise of temperature in Xinjiang's cotton producing areas is conducive to crop growth. Cotton emergence is generally good and the growth is relatively stable. Up to now, the high yield of new cotton is expected to be strong.

The off-season atmosphere of consumption in the textile market after the May Day holiday has been reflected. Enterprises in many provinces in the mainland reported that the number of new orders decreased compared with the previous period, and the operating rate declined. At present, the domestic cotton stock is still sufficient. It is expected that under the pressure of the marginal reduction of downstream textile consumption demand, the domestic cotton price will show a weak and volatile trend.