Could cotton linter gain upward momentum?

Seed cotton procurement in China has come to an end, with the procurement progress exceeding 90%. Cottonseed processing has also entered the final stage, with a national processing rate of about 70%. Recently, driven by the rebound in soybean meal and soybean oil futures prices, cottonseed prices have stopped falling and rebounded slightly, and cotton linter producers still quote firmly.

Currently, Xinjiang seed cotton procurement is in the final stage. Ginners have gradually stopped buying, and some keep stable procurement prices. The machine-picked seed cotton price is concentrated at around 6.7-7.0yuan/kg. Due to the high pre-procurement cottonseed prices, ginners have pre-sold their cottonseed, lowering procurement costs. Recently, the price of cottonseed has stopped falling and rebounded slightly due to the boost from the rebounding soybean meal and soybean oil futures prices, as well as the end-of-year stock-up efforts of downstream cottonseed oil and delinting plants. The price of cottonseed in Xinjiang is around 2,800-2,850yuan/mt, while in Shandong and Hebei, it is around 3,200yuan/mt, both falling by over 500yuan/mt from early Sep.

Cottonseed meal prices fell sharply in early Dec, and cottonseed oil was sluggish. Cottonseed oil plants have suffered losses in the processing, leading to an increase in shutdown of cottonseed oil and delinting plants. The overall operating rate is low, and the increase in cotton linter output is limited. The producers continue to quote firmly without big price volatility, with cotton linter for industry-grade refined cotton inland around 4,600-4,700yuan/mt, and in Xinjiang around 4,200-4,300yuan/mt, about 300yuan/mt higher than in early Sep.

To sum up, seed cotton procurement is coming to an end, and the processing has entered its final stage as well. The processing in northern Xinjiang is expected to be finished before the end of Dec and in southern Xinjiang before the Spring Festival. Afterward, as the pressure from the concentrated supply of cottonseed eases, the price decline will slow down. Recently, with the stabilization and rebound of soybean meal and soybean oil prices, as well as stock-up efforts in the downstream sector, cottonseed prices have stopped falling and rebounded slightly. Cotton linter producers continue to hold up prices, but there is still resistance to price increases as oil and delinting plants raise the operating rates.