Australian Cotton Volume Amplifies the Impact of Flooding in Pakistan

On Sept. 6, the Indian S-6 of some domestic traders in the bonded ports of Qingdao, Shanghai, Zhangjiagang and other major ports was 20,500 yuan/ton, the M-class US cotton price was 21,000 yuan/ton, and the Benin M-class cotton price in West Africa was 20,500 yuan. / Ton, the actual transaction price can make profit of 200 yuan / ton, but several foreign investors believe that domestic traders offer high, which Australian cotton offer at least 500 yuan / ton. A certain cotton trader in Singapore stated that several large foreign-currency spot and long-term Australian cottons have large trading volumes in recent days. The spot price in the Port Bonded Zone is lower than domestic traders by 300 yuan/ton, and it is only 5 days a day for foreign merchants. The contracted volume of Australian cotton reached 5,000 tons, causing the market to speculate on the price of cotton close to the bottom.

It is reported that since the beginning of September, Pakistan’s floods have intensified and floods have destroyed a certain number of cotton fields. Some cotton traders estimate that the losses may exceed 1 million bales (less than 200,000 tons). As a result, Pakistan’s domestic cotton prices have risen on September 6th. The increase in the price of cotton yarn even reached 50 US dollars/ton, causing some domestic cotton yarn importers to panic. However, most foreign companies have reported that the actual loss is only 100,000 to 200,000 tons, and this year, southern Pakistan has suffered floods in June and July. The output and grade of lint have been greatly affected. The recent floods have little impact on the supply and demand side. In India, the country’s growing cotton and weather conditions are relatively good, and the harvest is gradually coming to a conclusion, which can fully offset the reduction in production and losses of lint in Pakistan. In addition, since mid-August, although some US cotton regions in the southern part of the United States have been gradually picked and listed, due to the very low lint grade and relatively short fiber length, ICE warehouse orders cannot be generated, and less than 40% of the cotton can satisfy demanders. As a result of purchasing conditions, most international cotton traders have been aggressively promoting the sales of Indian and Australian cotton in the months ahead. Only two or three foreign companies still use US cotton as the main reason. Foreign investors are generally worried about the difficulty of late delivery or replacement of US cotton.

Some cotton traders said that commodities and ICE** still have one or two rounds of large downside, and due to Zhengmian’s relatively large amount of guarantees at 21,000-22,000 yuan, the actual pressure was after November and December. It will appear that the January contract may fall below 19,800 yuan/ton. Therefore, there is also some room for decline in foreign cotton. Customers do not need to rush to import now and can wait for the opportunity. However, in the short term, we must also pay attention to the US government’s stimulus policy and QE3 in the midst of a sluggish demand. Cotton importers should observe more and take less action.