Should cotton processing companies store cotton to wait for the price increase or be safe?

Since late November, the Zheng Cotton CF1705 contract has been oscillating within a wide range of 15,600-16,500 yuan/ton (the center of gravity continues to shift downward); although the replenishment efforts of cotton textile mills and traders in and outside Xinjiang are lower than expected, they support the spot price of cotton. Remaining high; coupled with the support of practical factors such as the “inefficient” transportation of Xinjiang cotton out of Xinjiang from October to December and the “supporting role” of real estate cotton, some cotton sorting companies and operators in Xinjiang are stuck in whether they are storing cotton to wait for an increase. Still in the midst of the boredom of settling down. Compared with the plummeting domestic cotton and cotton spot markets from September 2015 to April 2016, life for ginners and cotton-related enterprises is much better this year.

According to the author’s investigation, as of early December, the direct cost of 3128-grade lint cotton in Xinjiang cotton enterprises is about 15,000-15,300 yuan/ton (including machine-picked cotton, and individual ginners in Kashgar and Aksu cotton areas may Less than 15,000 yuan/ton), if the financial cost is 350-400 yuan/ton (calculated on a three-month basis, the monthly commercial loan interest is about 8%), the comprehensive cost of lint in the warehouse is about 15,400-15,700 yuan/ton, based on the current Xinjiang The gross weight transaction price of cotton on the platform is 15,600-16,000 yuan/ton. Although cotton companies do not have much profit, they will not suffer losses. This is the reason why Xinjiang’s cotton sorting companies and cotton merchants are hesitant and hesitant to sell or keep cotton.

The author’s opinion is that “sell more and save less” can completely reduce the operating risk in the first half of 2017. Among them, “Double 29” and “Double 30” hand-picked and machine-picked cotton can be considered to be postponed Take action, but for lint cotton of 3128, 2128 and lower grades, it is better to leave the bag safely. You can consider it from the following perspectives:

First, how much can the cotton spot price rise in 2017? Judging from the sales time, domestic cotton demand and consumption basically stagnated from the Spring Festival in mid-January to mid-February 2017. The state-owned cotton rotation began on March 6. Therefore, if the shipment and sales to Xinjiang are not concentrated before mid-January, For cotton, we can only have the opportunity to wait until March and April. Calculating the financial expenses for the past five months, the “Double 28” grade domestic selling price of 16,300-16,600 yuan/ton will be the same as the current price by then;

Second, foreign cotton puts pressure on the price of domestic cotton. At present, the cost of Australian cotton under 1% customs clearance for the April-June 2017 shipping schedule is about 14,800-15,000 yuan/ton, which is very competitive compared with Xinjiang cotton. Others, according to estimates, as of the end of December 2016, 2016 The annual cotton import quota will be extended to more than 200,000 tons until the end of February 2017. Coupled with the 1% tariff quota of 894,000 tons in 2017, the quota will be relatively sufficient until at least July 2017;

Third, reserve cotton is not unusable. Judging from the transactions and feedback from fabric factories from May to September 2016, the quality and spinnability of reserve cotton are still very good. Some large factories spinning cotton yarns with counts of 40S and above are also actively bidding and acquiring goods. There has been no significant impact on product contract delivery or order receipt. Some large factories have even retained cotton import quotas and only purchased reserve cotton and Xinjiang cotton with cotton textile yarn. Considering that the reserve cotton wheel output in 2017 is sufficient, the amount of completed tubes to meet the demand for combed yarn, high-quality cotton, and high-count yarn cannot be determined, but it will play a prominent role in replenishing the supply;

Fourth, cotton finishing companies are still under financial pressure. A large number of cotton ginning factories in Xinjiang used loans from the Agricultural Development Bank of China, credit cooperatives and other commercial banks. They had to repay the loans on a monthly basis and in proportion. Later, they achieved “double settlement and zero payment” at the end of August 2017. The financial pressure is like a shadow. Along the way, whether cotton can survive is questionable. In addition, compared with cotton companies that are self-owned, financed, or jointly acquired, it is not easy to occupy the acquisition funds for nearly 10 months;

Fifth, the pressure on downstream products such as cotton yarn and natural cotton cloth has increased. At present, the price difference between Indian and Pakistani yarns and domestic yarns at the port has reached 800-1,200 yuan/ton. The influx of imported yarns into the domestic market is overwhelming. Small and medium-sized cotton textile mills that produce low-count yarns of C32S and below have responded by reducing production and suspending production; The delay in the launch of Indian cotton, the postponement of exports, and the removal of hidden dangers in domestic monetary policy have put the acquisition, sorting and export of Indian cotton on the right track. The competitiveness of Indian yarn is “only strong but not weak”; coupled with the sharp fluctuations in the RMB exchange rate, the export situation is becoming increasingly complex. , how can cotton yarn and natural cotton cloth respond to the rise in cotton prices?

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