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Cotton linter price can stabilize before new sources arrive intensively

2021-10-11 08:20:34 CCFGroup

Cotton linter price kept rising amid tighter supply in the third quarter of 2021 because cottonseed market kept firm and continued to hit new highs in later period of 2021/22 crop year. Cottonseed oil plants and delinting plants were gradually closed due to high cost and high temperature, leading to less output of cotton linter and the price was pushed up by inelastic demand, even hitting a decade high.

Seed cotton procurement has started since the end of Aug and the price remains high due to production cut of cotton this year. Hand-picked seed cotton with ginning yield of 40% is mainly at 10-10.5yuan/kg in south Xinjiang, which is much higher than that of last year at 6.4yuan/kg. The harvesting of seed cotton is postponed this year and the arrival of new cottonseed and cotton linter is also later than that of prior years. Since the supply of cottonseed is increasing, the price has declined somehow. Cotton linter market is covered with wait-and-see stance and new linters are expected to arrive intensively after mid-to-late Oct.

In downstream segment, there is currently dual control on total energy consumption and energy intensity, so refined cotton companies in Jiangsu and Shandong are mainly closed due to electricity rationing and the demand for cotton linter will be reduced. The volume of machine-picked seed cotton will be gradually increasing and after new linters arrive on large quantity after mid-to-late Oct, the price is expected to drop, which may be largely stable in the short run.

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