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Insight | Time: Oct 14 2021 2:36PM
How will cotton linter perform on falling seed cotton price
 
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Seed cotton procurement price has been going up since the Mid-autumn Festival and kept hiking during the National Day holiday. Increasing ginners have stopped procurement, coupled with a series of policies cool down Chinese cotton market, the procurement price of seed cotton has been falling since last weekend. Cotton linter price remains high amid short availability.

 

More ginners have stopped purchasing high-priced seed cotton and the daily selling volume of state-reserved cotton has increased from 15kt to 25.7kt. Moreover, relevant departments crack down on speculation and hoarding up stocks, coupled with a series of cooling down cotton market, the procurement price of seed cotton kept falling last weekend. Now the mainstream procurement price of machine-picked seed cotton in Xinjiang is around 10.3-10.5yuan/kg, which has partially declined to 10-10.2yuan/kg. Hand-picked seed cotton is mainly procured around 11-11.5yuan/kg, while cotton farmers generally become reluctant sellers and ginners have procured less seed cotton. Therefore, the procurement by ginners is much lower than that of past years and cottonseed price is more than 1,000yuan/mt higher than prior years amid short supply. Seed cotton in North and South Xinjiang is respectively at 3,200-3,300yuan/mt and 3,400-3,500yuan/mt and that outside Xinjiang is mainly at 3,700yuan/mt, which is about 1,000yuan/mt higher than the same period of past years.


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Slower cotton procurement affects the arrival of cottonseed this year, so the price is higher and cottonseed oil plants act cautiously. There is less supply of cotton linter recently and the price will keep firm in the short term. Now cotton linter for food-grad refined cotton is around 7,500-7,600yuan/mt in Xinjiang and 8,300yuan/mt in Shandong and Hebei.

 

In conclusion, machine-picked seed cotton has gradually arrived since the Mid-autumn Festival with continued price increase, especially hiking price during the National Day holiday. More Xinjiang-based ginners stop procurement recently and the procurement price of seed cotton declines somehow, but cotton farmer become reluctant sellers and cottonseed supply is short. The arrival of cotton linter is much slower compared with same period of prior years, so the price will keep firm amid less supply in the short run.

[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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