Can cotton linter get further support from cottonseed?

Cottonseed was in an uptrend in the first quarter of 2022. In Jan, cottonseed generally gained ground by 100-200yuan/mt when cotton processing slowed down significantly after seed cotton procurement ended. The output of cottonseed was reduced, while cottonseed oil plants had to build up stocks for the Chinese Lunar New Year, so the price of cottonseed was generally picked up with optimistic outlook. However, cotton linter pulp mills and refined cotton plants did not rush to hoard up stocks with the coming holiday and trades of cotton linter market kept modest. However, the price of cotton linter was pushed up by the cost.

After the Chinese Lunar New Year in Feb, more enquires emerged in cottonseed market with the resumption of work by downstream companies. Moreover, cottonseed became much stronger with soaring soybean meal and soybean oil in early Feb, boosting the activity of processing by some ginners and cottonseed oil plants, so sales in Shandong and Xinjiang resumed and cotton linter suppliers also quoted firmly.

In the beginning of Mar, prices of oil and dreg surged and cottonseed oil plants running with higher operating rates became more active to purchase cottonseed, so the price kept going up. With increasing concentration of cottonseed resources as well as the epidemic control and rising oil price in mid-Mar, fewer vehicles available for transportation led to rising freight cost and cottonseed price continued to increase. Cotton linter offers also followed up, though prices could be discussed.

Most cotton by-products now keep strong including cottonseed whose resources are relatively concentrated, so the price is expected to be firm in the short term. As for cotton linter, the demand from cotton linter pulp mills and refined cotton plants remains lackluster, but the price may not see drastic fluctuation amid support from cost and is expected to stagnate amid weakness.