Since Russia launched military operations against Ukraine on February 24, the price of Zheng cotton has been cautious and fluctuated lower. The Russian-Ukrainian incident continues to ferment, in addition to having a direct impact on domestic textile exports to Ukraine, it is more reflected in the side effects of rising crude oil prices on downstream polyester fibers. Driven by the surge in upstream crude oil prices, although polyester factories did not significantly increase the price of polyester filament yarns, the market is generally bullish on crude oil prices in the future. In order to avoid the increase of procurement costs in the later period, the transaction atmosphere of polyester yarn in Jiangsu and Zhejiang is hot at this stage, which may alleviate the situation of high inventory of polyester factories.
Different from the increase in the transaction in the polyester filament market, the cotton and cotton yarn market was flat. Cotton prices remain high, and the overall profit of downstream spinning disks has already faced a loss, and the profit margins of textile enterprises have been further compressed, making the market mostly in a wait-and-see state. Due to the high cost of cotton and poor downstream orders, the sales of new cotton in 2021 is significantly slower than in previous years.
The national cumulative sales of lint cotton was 1.997 million tons, a year-on-year decrease of 1.906 million tons, a decrease of 1.096 million tons compared with the average value of the past four years; the sales volume completed 35% of the output (5.801 million tons), and the progress in the same period last year was 65%. The average progress in the past four years is 49%. This year, the sales progress of Xinjiang cotton continued to be slow, and the amount of cotton exported from Xinjiang continued to be significantly lower than the same period of previous years. This year, the cumulative export volume of cotton was 950,000 tons, a year-on-year decrease of 41%. According to data released by USDA's 98th Agricultural Outlook Forum, China's total cotton production in 2022/2023 is expected to increase to 6.1 million tons, a year-on-year increase of 3.7%. However, China's consumption outlook is not expected to be optimistic. In the long run, the increase in cotton production in the new year, while the consumption is lower than expected, is not conducive to the long-term operation of cotton prices at a high level.
