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Cotton futures prices rose by more than 4%, and its prices as a whole may fluctuate

by Joy

On June 1, the main cotton contract rose by more than 4%. COFCO Futures Research pointed out:

1. On the supply side, the Cotton Association predicts that the national cotton planting area in 2023 will be 41.489 million mu, a decrease of 69,000 mu from the survey at the end of March, a year-on-year decrease of 5.2%.

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Coupled with the Xinjiang cotton fixed production subsidy policy, the market expects domestic cotton production to be lowered in 23/24; there are big differences among various institutions and cotton farmers on the reduction in per unit yield, and we need to pay attention to the follow-up weather and growth.

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2. In terms of demand, after entering the off-season, the incremental margin of downstream orders has decreased, but small and short orders have been placed one after another.

With the correction of cotton prices last week, spinning mills still have a large profit margin for high-count yarns, and a large number of stockpiles have been replenished when the profits of low-count yarns have turned from losses to profits. Cotton stocks are the highest in nearly February.

In the short term, as the heat on the supply side subsides, the focus of transactions may return to the overall fundamentals. In the off-season, the finished products of the middle and lower reaches of the yarn mills and cloth factories continue to accumulate slightly, but overall they are still at a reasonable level. The overall cotton price may fluctuate along with the macro range run.

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