Cotton Price Dropping Room is Not Big
Author: May 11, 2011 13:59
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Recently Zhengzhou cotton price broke through the level stage of 26000 points that dragged U.S. cotton price down. Funds are expected to be made from cotton, the best seller of last year. Although the spring cultivate area has been identified, according to estimation of the new season cotton output, the new added cultivate area is only to ease the supply pressure. Offshore funds thinks about to make some money through speculation of weather factors. Yet, wise idea it were, the U.S funds, the big buyer of U.S. cotton—China market do not go for it.
See from cotton index, quotation fluctuation range is still big, and the price is unstable. Previously, imported cotton price is lower than domestic price, while since the end of last year, imported cotton price is higher than Xinjiang cotton by 5000CNY or so. And recently, the price difference is narrowing to 1000-2000CNY or so, it is still hard to raise domestic sale. U.S cotton price dropped greatly in April, facing the difficulty of contract call of, delay and some other problems.
During March to May, textile enterprises production march into a normal way, procure volume is released to some degree. National cotton industry stock rebound compared year by year. Deposit reserve fund is modulated again by the state, thus make the downstream market situation even worse. Inhibited procure passion. According to date surveyed from the national cotton market, by 11th April, national cotton stock is about 1105.5 thousand ton, 14.7% over last year, and is 9.5% higher than the last three years. Textile enterprise yarn marketing rate is 84%. Chain relative dropped 8.8%, as the lowest point since September, 2008. Textile related trade show began since the beginning of May, under the background of RMB appreciation, export data is worth to pay attention to. If the data is optimistic, it will increase enterprise confidence for the downstream market, so as to push the procurement up.
Cotton cultivate area of every country is determined in early April. Now the following concern is the impact of climate on production. See from the short term, the first thing to concern is the implementation of cotton cultivates area. Although the annual yield is increased, the gap of production and marketing and also the yield per unit is still the problem. During spring sowing, if the climate or other influential factors make the cotton area far from expected, it will cause an unpredictable impact on international output.
The most reassuring thing is the import and export data. We believe the annual export situation is optimistic. The export growth rate of China to Europe, America and ASEAN is slowed down. Japanese earthquake disaster relief activity has some impact on global economic recovery. But see from the current data, the impact on China’s textile and garments exportation has not yet come into view. In the short term, earthquake and disasters disrupt sea way transportation, influencing order turn over or temporary delay. Japan’s post disaster reconstruction is estimated an urgent need for textile products, especially for industry textile products, which will boost China’s textile exportation to Japan.
The depressed situation of cotton market will continue to May and now there is no good news to pull it up. North hemisphere is busy with spring sowing and cultivating. There will be no big favorable factor except a significant deviation due to weather factor on implementation. Unfavorable situation is much more likely to happen. Firstly, the domestic downstream market lacks confidence, procurement sluggish, price softens and USDA reduced China cotton 110 thousand. Secondly, domestic macro control policy issued frequently, adding up with the dead news of Laden, brings about unfavorable factor to the market price. Generally speaking, there are still no favorable factors to change the weak situation of the market. It is expected that the downstream exports picks up will push spot goods procurement up. Till now, cotton price further drop room is quite small, close to the cost bottom line, but bargain hunting is not recommended until the downstream spot goods price stabilized. For the exportation rebound up soon, we believe cotton price rise up will not be long, maybe just in May.
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Editor: Candy From: 168Tex.com
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