A good start of cotton linter market after Chinese Lunar New Year holiday

Soybean meal, cottonseed oil and palm oil futures market reopened with hiking price or limit-up after the Chinese Lunar New Year holiday driven by rising ICE cotton futures, crude oil and US soybean futures around the holiday. Therefore, cottonseed and cotton linter prices saw fast price rise, which had gained ground by almost 1,000yuan/mt since New Year's Day.

There are increasing enquiries in cottonseed market with resumption of work by downstream plants since Feb 6-8. Coupled with soaring price or limit-up of soybean meal, soybean oil and palm oil futures, there is strong expectation for rising prices of cotton by-products like cottonseed oil and cotton dreg. There are more enquires in Shandong and Xinjiang with recovery of transactions and some ginners have resumed operation ahead of time, so cottonseed price has surged. Now Xinjiang-origin cottonseed is at 3,800-3,900yuan/mt in Shandong and Hebei, which has risen by more than 300yuan/mt since New Year's Day.

Cotton linter price slumped after soaring in 2021, shedding to 5,800-6,000yuan/mt at the end of Dec from the peak of 10,500-10,700yuan/mt at the end of Oct. Due to sharp price decline within a short period of time, refined cotton companies generally stood on the sidelines by worries over unsteady feedstock prices, thus the restocking at the end of year was delayed. Cotton linter pulp mills and refined cotton plants in major areas gradually restarted production around Feb 6-8 and there were more enquiries of cotton linter with fast price increase of nearly 1,000yuan/mt since New Year's Day.

Cotton linter pulp mills and refined cotton plants had restocking demand before the holiday, but they were waiting for stable raw material prices. Given hiking cotton dreg and cottonseed oil prices after the holiday, cottonseed and cotton linter market is expected to be stronger in the short run.