In March 2022, the situation in Russia and Ukraine continued to affect the commodity market. Affected by the domestic epidemic and other factors, the downstream demand in the domestic cotton market is not good, and logistics and transportation are hindered. The busy season of textile enterprises is not prosperous, the operating rate is insufficient, the number of new orders is small, and the price of finished cotton products has dropped, and cotton raw materials can be purchased as needed. Driven by the prices of bulk commodities and crude oil, the international cotton price rose strongly to the highest level in the past ten years in the middle of the month. During the same period, the domestic cotton price rose steadily and slightly, and the increase was lower than the international price.

1. Changes in spot prices at home and abroad

1. Domestic spot prices rose slightly

In March, driven by the strong external market, domestic futures gradually rose in the middle and late months of the month. However, due to factors such as poor downstream demand and domestic epidemic, domestic cotton spot prices only rose slightly at the end of the month. During the month, there were sufficient resources for new cotton to be listed, and cotton enterprises were more motivated to sell. However, the peak season of textile enterprises was not prosperous, and the sales of cotton yarn and other products were not smooth. Cotton raw materials were purchased as needed, and the overall cotton sales progress was slow. At the end of the month, the China Cotton Price Index (CCIndex3128B) was 22,899 yuan/ton, up 128 yuan month-on-month; the monthly average price was 22,739 yuan/ton, down 105 yuan month-on-month and up 6,791 yuan year-on-year.

2. The amount of long-staple cotton resources is low and the price is rising

In March, domestic long-staple cotton resources were few, and the price was firm and continued to rise. However, due to weak demand from textile enterprises, the actual transaction was small. At the end of the month, the 137-level transaction price was 55,000 yuan / ton, an increase of 2,500 yuan / ton from the previous month, higher than the China Cotton Price Index (CCIndex 3128B) 32,101 yuan in the same period, and the price difference increased by 2,372 yuan compared with the end of the previous month.

3. International cotton prices rose strongly, and domestic and foreign cotton prices were upside down

In March, the conflict between Russia and Ukraine caused sharp fluctuations in overseas crude oil prices. Although the Federal Reserve raised interest rates within the month, global inflation expectations were difficult to ease. ICE cotton prices fell slightly within the month, and then rose rapidly in late March. Affected by this, the international cotton spot rose sharply within the month. China's imported cotton price index FCIndexM was 141.38 cents/lb for the month, up 2.11 cents month-on-month; at the end of the month, it was 156.6 cents/lb, up 21.1 cents month-on-month, and the 1% tariff was reduced to RMB 24,321/ton, which was higher than the domestic price in the same period. The spot is 1422 yuan, and the price of cotton inside and outside is upside down.

4. The downstream sales of textiles are not smooth, and the price of pure cotton yarn has fallen

In March, affected by the epidemic situation all over the country, textile enterprises were not busy in the peak season, the operating rate was insufficient, the freight in many places was blocked, the downstream demand was generally weak, the price of pure cotton yarn products decreased, and the sales loss increased. Buy as you go. Some textile enterprises have switched to alternative textile products, such as polyester or chemical fibers. Specifically, the transaction prices of pure cotton yarn KC32S and combed JC40S at the end of the month were 28,845 yuan/ton and 32,900 yuan/ton, down 270 yuan and 350 yuan respectively from the end of last month; polyester staple fiber was 7,720 yuan/ton at the end of the month, compared with the end of last month. Up 170 yuan, viscose staple fiber was 13,500 yuan/ton at the end of the month, up 300 yuan from the previous month.

2. Analysis of factors affecting price changes at home and abroad

1. The volume of cotton shipped out of Xinjiang has increased significantly compared with the previous month

In March 2022, a total of 315,900 tons of cotton was shipped out of Xinjiang, an increase of 168,600 tons or 114% from the previous month. From the perspective of transportation mode, both road and rail shipments have increased, especially railway shipments, which have increased by nearly 70% month-on-month. 155,300 tons of cotton were shipped by road, an increase of 28,500 tons from the previous month and a decrease of 197,500 tons from the same period last year. The total shipment volume of Xinjiang professional warehousing out of Xinjiang cotton by railway totaled 160,600 tons, an increase of 140,100 tons from the previous month and a decrease of 120,300 tons from the same period last year. In terms of freight rates, in March 2022, the road freight rates for cotton out of Xinjiang increased slightly from the previous month; the railway freight rates were stable.

2. Zheng cotton futures fluctuated upward, and registered warehouse receipts declined

In March, Zheng cotton futures fluctuated upward in the middle of the month, and closed up slightly at the end of the month. As of the end of March, the settlement price of the main contract CF20 at the end of May was 21,755 yuan/ton, an increase of 920 yuan, or 4.42%, from 20,835 yuan/ton at the end of last month. At the end of the month, there were 17,789 warehouse receipts, equivalent to 711,600 tons, a decrease of 26,300 tons from the end of the previous month, and the registered warehouse receipts decreased slightly.

In March and March, a number of PMI indicators fell

In March, a cluster of epidemics occurred in many places in China, coupled with a significant increase in international geopolitical instability factors, the production and operation activities of Chinese enterprises were affected to a certain extent. On March 31, data from the National Bureau of Statistics showed that the manufacturing PMI in March was 49.5%, a decrease of 0.7 percentage points from the previous month and lower than the threshold. Many key sub-indices fell back to the contraction range. Among them, the production index was 49.5%, a decrease of 0.9 percentage points from the previous month, indicating that the manufacturing production boom was down; the new orders index was 48.8%, a decrease of 1.9 percentage points from the previous month, indicating that the manufacturing market demand has weakened.