How does cotton linter market run amid a steady rise in cottonseed?

Cottonseed market trend has been strong recently, with prices steadily rising. Since the beginning of the year, the cumulative increase has exceeded 20%. In contrast, cotton linter market seems to be calm. Although it has rebounded recently, it is obviously weaker than cottonseed, and the price is also significantly lower than the level at the beginning of the year.

At the end of Aug last year, cottonseed market fell to a trough, and then the price fluctuated upward. Especially since the beginning of Apr this year, with the gradual completion or end of seed cotton processing in the ginners, the supply of cottonseed has decreased, and the import volume of cottonseed in Apr was zero, resulting in a significant increase in the consumption of cottonseed and a large amount of destocking. There are still more than 3 months before the arrival of new cottonseed. The inventory of cottonseed in Xinjiang is expected to be just above 400kt. When the resources are reduced, manufacturers have a strong intention to quote firmly. In addition, the recent tight supply of cottonseed meal has gradually got rid of the drag of soybean meal and has gone out of an independent market. The tight supply and strong price of cottonseed meal have further supported the strength of cottonseed prices. At present, the price of cottonseed in Xinjiang has risen to about 2,650 yuan/ton, which is 450yuan/mt or 20% higher than the beginning of the year, which is obviously stronger than the trend of cotton in the same period.

Although the price of cottonseed has been rising, the price of cotton linter has not shown strong momentum, and the trend is obviously weaker than that of cottonseed. Among them, in the middle of May, cotton linter once fell to the bottom at the end of Aug last year. Due to the achievements of the Sino-US economic and trade high-level talks during May 10-11, which greatly reduced the bilateral tariffs with positive macro sentiment, and driven by the rise in cottonseed prices and the replenishment of downstream plants with inelastic demand, cotton linter market stabilized after falling around mid-May, and the price rebounded. At present, the price of cotton linter for industry-grade refined cotton outside Xinjiang is nearly 3,900yuan/mt, and that in Xinjiang is about 3,600-3,700yuan/mt, which is still 700-800yuan/mt or 17% lower than the beginning of the year.

To sum up, the import volume of cottonseed has decreased significantly this year, Chinese cottonseed meal is in short supply and the price is strong, and it has gradually gone out of an independent market. Recently, there are not many cottonseeds available for circulation and processing. With the reduction of resources and the improvement of concentration, the price of cottonseed in Xinjiang and Shandong has continued to rise. If there is no black swan event, the future market is still "easy to rise and difficult to fall". Supported by the combination of rising costs and rigid demand, the price of cotton linter has rebounded recently, but under the constraints of increased cotton linter imports and variable macro environment, the overall strength is not strong, and the price trend is weaker than that of cottonseed.