China's cotton market weekly report: cotton prices enter a wait-and-see period under pressure

Release Date:2021-06-06

Abstract: This week (March 29-April 2, 2021), domestic and foreign cotton prices stabilized weakly, and the overall level was lower than last week; domestic and foreign cotton yarn prices continued to decline, and polyester staple fiber prices continued to decline. 1. Domestic cotton prices fluctuated weakly This week, after the Xinjiang cotton turmoil, the market had a strong wait-and-see sentiment. New orders for downstream textiles were weak, and finished product inventories had accumulated. Cotton prices were mainly weak and oscillating. March 29, 2021


(March 29-April 2 2021), domestic and foreign cotton prices stabilized weakly, and the overall level was lower than last week; domestic and foreign cotton yarn prices continued to decline, and polyester staple fiber prices continued to decline.


   1. Domestic cotton prices fluctuate weakly


   This week, after the Xinjiang cotton turmoil, the market has a strong wait-and-see sentiment. New orders for downstream textiles are weak to follow up, finished product inventory has accumulated, and cotton prices are mainly weak and fluctuating. From March 29 to April 2, 2021, the average settlement price of the main cotton futures contract on the Zhengzhou Commodity Exchange was 14,784 yuan/ton, a decrease of 257 yuan/ton or 1.7% from the previous week; representing the country that represents the market price of standard-grade lint in the mainland The cotton price index B index averaged 15,162 yuan/ton, down 359 yuan/ton from the previous week, or 2.3%.


   2. International cotton prices fell slightly


   This week, on Wednesday, Biden announced the market’s long-awaited infrastructure investment plan, which supported the U.S. stock market soaring. International cotton prices once stabilized and rebounded. However, international cotton prices weakened again due to market concerns about extended European blockades and US tax increases. From March 29 to April 2, 2021, the settlement price of the main contract of New York cotton futures was 79.99 cents/lb, down 1.89 cents/lb from the previous week, or 2.3%; representing the average CIF price of imported cotton in China’s main ports The average price of the International Cotton Index (M) was 87.28 US cents/lb, down 2.54 US cents/lb from the previous week, or 2.8%, equivalent to RMB 14,117 per ton (calculated at 1% tariff, including port miscellaneous goods and freight). Compared with the previous week, it was down by 369 yuan/ton, or 2.5%, the international cotton price was 1044 yuan/ton lower than the domestic cotton price, and the price difference between inside and outside was 9 yuan/ton wider than last week.


   3. Cotton yarn prices at home and abroad continue to fall


   This week, the downstream textile market has a strong wait-and-see sentiment, and overall trading is quiet. Enterprises have switched to producing conventional yarn products, and cotton yarn prices have continued to fall. Affected by the rebound of the overseas epidemic situation and the drop in cotton prices, the international cotton yarn market has begun to weaken, and the price of imported yarn has continued to decline. At present, the conventional outer yarn is 573 yuan/ton higher than the domestic yarn. The price increase of downstream fabrics led to the cancellation of some orders, the overall market slowdown, the weaving inventory rebounded slightly, the price of cotton fabrics stabilized after the fall, and the overall profit margin declined. Downstream demand for polyester staple fiber weakened, and prices continued to fall.


   Fourth, outlook


   U.S. infrastructure and tax increases are on the agenda at the same time, and international cotton prices have entered a wait-and-see period under pressure. Recently, US President Biden proposed a US$2.25 trillion infrastructure plan, and at the same time increased fiscal revenue through tax increases to realize the infrastructure investment plan, which aroused market concerns about the long-term development of the US economy. In the international cotton market, new cotton sales in the northern hemisphere are coming to an end. As of March 25, the cumulative sales of U.S. cotton in 2020/21 was 3,473,700 tons, fulfilling the USDA forecast of 102.9%, and the number of contracts signed last week began to drop sharply; Cotton Corporation of India (CCI) Accumulatively acquired 1.56 million tons according to MSP, which is 92% of the acquisition target; Pakistan will approve the proposal to import cotton from India, which will curb the sharp increase in Pakistani cotton prices. With the repeated epidemics in the United States and Europe, the sales momentum of terminal apparel has declined. Data show that in January, India's clothing appreciation index fell by 6.8% from the previous month, and in February, the retail sales of clothing and clothing accessories stores in the United States fell by 2.75% from the previous month. On March 31, the U.S. Department of Agriculture announced that the sown area of U.S. cotton for the year 2021/22 was 12 million acres, a decrease of only 0.5% year-on-year, which is of limited benefit to the market. At the same time, the next year’s cotton area, weather and other speculation factors enter the window period, and international cotton prices Enter the period of oscillation and fluctuation.  

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