Market Observation: The Basis Of Spot Sales Of Domestic Cotton Is Relatively Large And Temporarily Stable

As of December 24, the cumulative processing volume of Xinjiang lint in China was 5.6683 million tons, an increase of 39200 tons over the previous day. Although the daily processing has declined, it is still at a high level over the same period of the previous year.

The trading of domestic cotton was average yesterday, and the trading situation of traders in the past week was uneven, because the pace of stock replenishment required by different textile enterprises was slightly different; 24/25 Kashgar Handpicked 3129/29B Miscellaneous 2, the transaction price is about CF01+500, Xinjiang Treasury.

The basis of spot sales of domestic cotton is relatively large and temporarily stable, and the market is still adding a small number of low basis spot sales periodically; In 2024/25, Xinjiang Mechanic Procurement Pure 3129/29B/Miscellaneous 3.5, more sales basis is CF05+700 or above, and a small number of low basis of the same quality is CF05+600~700, which is self raised in Xinjiang.

According to the statistical survey of 31 provinces (districts and cities) in China (the cotton planting area in Xinjiang is obtained through remote sensing measurement), the cotton planting area, unit area yield and total yield in 2024 are as follows:

The national cotton planting area is 2838300 hectares (4257400 mu), an increase of 501000 hectares (752000 mu) over 2023, an increase of 1.8%. The national cotton output per unit area is 2171.6 kg/ha (144.8 kg/mu), an increase of 156.7 kg/ha (10.4 kg/mu) over 2023, an increase of 7.8%. The total cotton output in China is 6.164 million tons, an increase of 546000 tons or 9.7% over 2023.

At present, the supply side continues to maintain abundant, the picking of new cotton is basically completed, and the output in Xinjiang has increased more than expected compared with last year. At present, the market transaction logic is gradually shifting to the demand side, and the overall sales performance of the downstream has been stable in the near future, but the sustainability is relatively limited. Considering the early Spring Festival holiday this year, some markets are planning to take a holiday in advance, so the trend rate of Zheng Mian will continue to maintain a weak shock level in the background of no obvious increase in the future market.

The China Cotton Association predicted in December that in 2024/25, the national cotton output will be 6.436 million tons, up 9.5% year on year. According to the estimation of new cotton harvest and processing volume, the cotton output in Xinjiang will be increased to 6.104 million tons, up 81000 tons from the previous period. There is no adjustment in the mainland; The cotton import volume was 1.4 million tons, down 56.7% year on year, down 500000 tons from the previous period, mainly because of the abundant domestic resource supply and the expected decrease in import; The consumption was 7.94 million tons, basically flat on a year-on-year basis, down 60000 tons from the previous period. Since the new year, the demand for cotton textiles has been weak, less than previously expected; The ending inventory was adjusted to 9.815 million tons, down 0.1% year on year.

According to the data of the National Bureau of Statistics, the yarn output from January to November 2024 is 20.59 million tons, which is the same year on year; The fabric output totaled 28.21 billion meters, up 1% year on year. According to the data of the General Administration of Customs, from January to November 2024, China's textile and clothing exports totaled US $273.06 billion, up 2% year on year. From January to November 2024, China imported 2.48 million tons of cotton, a year-on-year decrease of 46.7%; Cotton yarn imports totaled 1.37 million tons, down 10.8% year on year.

On the whole, the pressure of loose domestic production and supply in the cotton market this year is still relatively large, but it has dropped to around 13000. Due to the reluctance of cost supporting ginners and traders to hedge short at low levels, there is some support below. It is estimated that low level shocks will still prevail in the future.