Cotton linter price likely to drop amid imbalance between supply and demand

Seed cotton of 2022/23 crop year has been gradually harvested since the end of Aug, while ginners are cautious about procurement that is generally slow now. New cottonseed has arrived sporadically and the price of old cottonseed remains at higher level. Trades are thin for old cotton linter and prices are temporarily stable before the arrival of new sources.

Hand-picked seed cotton has been harvested since late Aug, but the trading volume is not large and the procurement price is largely around 7yuan/kg (the buying idea of machine-picked seed cotton in Xinjiang is around 5-6yuan/kg). Most ginners still wait and see currently and the mass procurement can be expected after mid-Sep. It is mainly because that cotton growers become reluctant sellers at lower price of seed cotton compared with last year. Moreover, ginners have suffered huge losses after cotton price has plunged.

New cottonseed is arriving on small quantity in early Sep and the price of old cottonseed on the market generally stays at higher level. Cottonseed oil plants are mostly shut for maintenance and some Xinjiang-based plants order new cottonseed at 2.5-3yuan/kg. New cotton linter is likely to arrive in late Sep and the price of old cotton linter is mainly stable amid thin trade at present. According to the trend of past years, most cottonseed oil and delinting plants will resume operation around the National Day holiday when new cotton seed has arrived on large quantity. Thus, the price is likely to drop later amid imbalance between supply and demand.

Cotton production of 2022/23 crop year is expected to grow by more than 4% to around 6 million tons. The rush for seed cotton procurement is fading in 2022, with much lower price versus last year. The trading activity of old cottonseed and cotton linter is weaker during the transition period of supply currently, so the price will be mainly stable in the short run. However, the price may be falling later with increasing supply.