Cotton linter prices keep moving down with the arrival of new cotton
Recently, soybean meal futures have shown strong performance with steady increase in price. Cottonseed meal has followed up and cottonseed has maintained a strong trend, while cotton linter prices are still moving down.
In the later period of 2022/23 crop year, cotton and cottonseed supply is limited. With expectations of reduced cotton production and competing for purchasing seed cotton in the new crop year, as well as a possible slight delay in the arrival of new cotton, the spot cotton prices are expected to have a stable and upward trend, showing a tendency to rise easily but fall with difficulty. Additionally, the soybean meal futures market has remained strong recently, with prices continuously rising, supporting the firm price trend of cottonseed, and it is anticipated that prices will remain at a high level before a large amount of new cotton and cottonseed arrivals.
Recently, cotton linter faces pressure from both upstream and downstream. On one hand, cottonseed prices have been relatively strong, increasing cost pressures. On the other hand, refined cotton demand is weak, leading to continuous price decline. Currently, the mainstream price for industry-grade refined cotton is around 9,000-9,200yuan/mt, with cumulative price decline of over 600yuan/mt. Therefore, influenced by factors such as high beginning stocks and lower-than-expected downstream demand, cotton linter has not performed as well as expected this year.
In conclusion, since the beginning of Jun, soybean meal futures have been strong, with prices continuously rising. Cottonseed meal and cottonseed suppliers have shown a strong willingness to support prices, and cottonseed price keeps firm amid less supply. It is expected that prices will remain at a high level until a large amount of new cottonseed arrives in Oct. Cotton linter faces the squeeze of high cottonseed prices upstream and low prices of refined cotton downstream. In addition, with the upcoming arrival of new cotton, the suppliers have started preselling the sources for Sep and Oct, putting downward pressure on prices.
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