How does cotton price continue to rise? How does Xinjiang textile company react?

On July 12, the reserve cotton output remained at 30,000 tons, which not only did not bring bad influence to Zheng Cotton, but also helped it to advance all the way. This overreaction exceeded most people's expectations. Although Zheng cotton experienced a short-term oscillation correction before, even once approaching 14,000 yuan / ton, but did not shake its upward trend, and finally under the influence of the US dollar's bullish gains, the main CF1701 contract once again climbed to a high of 15,380 yuan / ton, Faced with such a crazy cotton market, Xinjiang textile companies how to respond?

It is reported that at this stage, Xinjiang textile enterprises generally lack cotton raw materials, but their enthusiasm for purchasing is not high. In order to ease the shortage of raw materials, some companies have begun to reduce production capacity. On the one hand, they expect a cotton price correction, and on the other hand, they observe cotton yarn prices. Rising situation, and then decide whether to purchase lint.

As shown in the above chart, domestic cotton yarn prices have risen in April-July, of which C32S has seen the largest increase, with a price difference of more than 1,000 yuan/ton before and after, while cotton spreads have reached more than 2,000 yuan/ton during the same period, while the Zheng cotton gains have risen from 10,000. The low of around yuan/ton rose to 15,000 yuan/ton. The price increase of cotton yarn was significantly lower than that of cotton, and the profit of textile companies was squeezed.

According to a person in charge of a cotton company in Xinjiang, the spot price is now higher, the price of high-quality cotton is already above 14,000 yuan/ton, and the profit from spinning is low. Therefore, it is necessary to stop the production decisively and sell the used cotton raw materials at high prices to other textile enterprises.

At present, the “upside down” phenomenon of prices of cotton yarn inside and outside has not yet changed. As of July 11, the price of imported yarn for C32S is around 21,000 yuan, while the price of domestic yarn for C32S is around 20,800 yuan per ton. Domestic yarn still maintains certain competitive advantages. There is still room for growth in cotton prices.

Although the enthusiasm of the downstream textile enterprises has declined, they have not been able to prevent the price of cotton from continuing to rise. At this time, Xinjiang's textile companies really need to calmly think about the trend of the cotton market and find out the countermeasures. Observing the change is not necessarily a good strategy. In the next period of time, what changes will happen in the market?


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