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Insight | Time: Oct 21 2021 10:39AM
Slow seed cotton harvesting pushes up cotton linter price
 
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Summary

Cottonseed price remains high amid slower seed cotton harvesting

Cotton linter suppliers become reluctant sellers and keep raising offers


Cotton growers become reluctant sellers amid bullish expectation this year and seed cotton is harvested slowly. At the same time, there is stagnation in negotiation for cotton purchasing between cotton ginners and growers. Since the National day holiday, China cotton linter market has been bullish with soaring price, which has gained ground by more than 1,500yuan/mt so far.


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When cotton production is reduced and cotton farmer become reluctant sellers this year, coupled with loose liquidity and rising commodities, seed cotton harvesting has been generally slow and the price has been skyrocketing. After the Mid-autumn Festival in particular, machine-picked seed cotton in Xinjiang has gradually arrived at the market and the price has been rising faster after the National Day holiday. Now seed cotton procurement price in Xinjiang holds steady at high level, which is 10.4-10.8yuan/kg in the south and 10.6-11yuan/kg in the north, much higher than 6.5-7yuan/kg in the same time of last year.

 

Seed cotton is harvested slowly this year and cottonseed supply has been short, so the price is 1,000yuan/mt higher than the same period of past years. Now cottonseed in Xinjiang is mainly at 3,250-3,400yuan/mt and 3,700yuan/mt outside Xinjiang. Due to high freight cost of 800-900yuan/mt from Xinjiang to other provinces, Xinjiang-origin cotton is sold higher around 4,100yuan/mt in Chinese inland.

 

Now the procurement of seed cotton in Xinjiang is around 4.5 million tons, which is less than 40% of total volume. According to data from national cotton market monitoring system, 31.7% of cotton crops has been harvested as of Oct 15, down 30.7 percentage points year on year. 73% of seed cotton at growers' hands was sold to ginning factories, down 11 percentage points on yearly basis. In Xinjiang, the proportion was respectively 30.2% and 80.6%.

 

Cottonseed output of ginners has been short and coupled with the influence of power rationing, the resumption of cottonseed oil and delinting plants outside Xinjiang is limited and cotton linter suppliers become reluctant sellers with firm prices. Driven by restocking demand from downstream sector, cotton linter supply has been tight and the price keeps going up. Now the higher offer of cotton linter for food-grade refined cotton is at 9,100-9,200yuan/mt in Xinjiang and that of Chinese inland has reached 10,000yuan/mt.

 

In conclusion, seed cotton price has been high amid slow procurement under the background of less cotton production, growers鈥 reluctance of selling cotton and loose monetary policy this year. Seed cotton harvesting in Xinjiang is less than 40% of the output and cottonseed production is short accordingly. Due to less processing volume of cottonseed oil and delinting plants, cotton linter suppliers become reluctant sellers with prices rising constantly.

[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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