Since the beginning of December 2023, ZCE cotton futures have continued to rise, with the key contract rising from a low of 14,740yuan/mt to a high of 15,860yuan/mt on the morning of January 18, up more than 1,000yuan/mt. There is an increase. From a Mt fundamentals perspective, the sustained price increase during this period is primarily driven by good demand from downstream sectors. After cotton prices bottomed out in late November, the downstream textile industry experienced a sharp reduction in cotton yarn inventories due to pre-holiday replenishment demand, pressured demand and delayed demand from October and November. This event alleviates the cotton yarn trader's concerns about inventory, and the entire industry chain returns to smooth operations. Strong downstream demand supports the upward trend in cotton prices.
Due to the performance of downstream textile mills, cotton yarn inventories have declined sharply since the beginning of December and have reached a relatively low level. However, cotton yarn sales have slowed recently due to the approaching spring festival. However, the basic situation of low inventory pressure in spinning mills and no significant inventory pressure has been established for cotton yarn traders. Therefore, textile mills are still in demand to buy cotton at favorable prices after a rapid decline in cotton thread inventory. The order position for textile factories remains better than expected, with some large-scale textile enterprises receiving orders by February or March, while smaller enterprises have a relatively poor order position. Overall, home textile orders remain strong. Considering the recent boom in tourism in Harbin, residents' willingness to travel remains stronger than during the epidemic period.
From the latest market retail data, Chinese domestic sales demand in 2023 is also satisfactory, especially in November and December when the year-on-year growth rate of clothing retail sales continued to expand, reaching 11% for the full year. went
Overall, unless downstream demand declines significantly, the upward driving force in cotton prices will remain. However, the performance of downstream end-market demand after the Spring Festival needs to be verified. If end-market demand is weak, inventory pressures may reappear for cotton yarn traders, which may put pressure on cotton prices. Conversely, if end-market demand remains strong and hedging pressure gradually eases, cotton will be a strong driving force for price growth.
Source: CCF
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