Regional Economy: The Market Reaction Affects The Purchase Price Of Seed Cotton In Xinjiang, Which Is Weak And Fluctuates

During the National Day holiday, the machine picked seed cotton in Xinjiang began to pick and sell one after another, and the price of seed cotton rose compared with that before the holiday. According to the difference in quality indicators, the price of machine picked seed cotton was about 6.0-6.5 yuan/kg, and that of hand picked seed cotton was about 7.0-7.5 yuan/kg. After the festival, with the callback of Zheng Mian's futures price, the price of Xinjiang seed cotton also fell, about 0.5 yuan/kg lower than the high price before the festival, and the selling price of Xinjiang seed cotton was concentrated at 6.2-6.4 yuan/kg.

International aspect: The export data of American cotton in the latest week is weak. According to the United States Department of Agriculture (USDA) 9.27-10.3, the net contract of American upland cotton in 2024/25 in the week was 20321 tons, a decrease of 7% from the previous week, and an average decrease of 12% from the recent four weeks. This round of improvement in the US cotton market is mainly based on the impact of the macro environment, and the fundamental situation has not improved significantly. Recently, the US macro factors have fluctuated greatly, and the impact on ICE cotton has intensified.

According to the October global supply and demand forecast of the US Department of Agriculture, the US cotton production, consumption and export in 2024/25 will be reduced month on month. The cotton output of the United States was reduced by more than 300000 bales to 14.2 million bales, mainly due to the loss of cotton output in the southeastern region of the United States caused by Hurricane Hailin. The average cotton yield in the United States dropped by 18 pounds to 789 pounds/acre. Domestic cotton consumption in the United States was reduced by 100000 bales to 1.8 million bales. The export volume of American cotton decreased by 300000 bales to 11.5 million bales, and the ending inventory increased by 100000 bales to 4.1 million bales. Inventory consumption ratio is slightly lower than 31%.

Demand: after the festival, under the positive influence of macro policies, the price focus of pure cotton yarn market continued to move up, but the overall purchase and sales were weak and stable. Recently, the futures market has fallen, and the trading and investment are light. Textile enterprises mainly need to replenish their stocks, and the wait-and-see mentality has increased. As of October 11, 2024, the market reference price of 21S pure cotton yarn in Shandong Province is about 23000 yuan/ton, up 1.77% from the pre festival price; The market reference price of 32S pure cotton yarn was 24300 yuan/ton, up 1.78% from that before the festival. The operating rate of textile enterprises rose to a 13 week high, and the operating rate of textile mills was 10.8 percentage points higher than that of the same period last year. The finished products of textile enterprises went to the warehouse for three consecutive months. There was indeed some improvement in downstream demand, and the decline in cotton prices in the early stage gave textile enterprises profits.

Future market forecast: The recent macro stimulus policy has continued to drive market sentiment, and the rise of Zheng Mian Futures has driven the cotton price to rise along the trend. However, due to the continuous expectation of new cotton high yield superimposed on downstream demand, the improvement of fundamentals is still weak, and the purchase price of seed cotton in Xinjiang has fallen due to the continuous weak shock of Zheng Mian, and the cotton price continues to be weak, We still need to pay attention to the sustainability of the follow-up macro policies and the purchase of seed cotton.