Sep 19, 2023
From Apr 2023, there were gradual expectations of lower 2023/24 Xinjiang cotton production and competition for seed cotton procurement in the second half year. In terms of current situation, the low temperature in Apr and May has great impact on the cotton crops in Kuqa and Korla, while in Kashgar, cotton crop develops well. Besides, the high temperature in Jul affects much on the cotton crops in North Xinjiang. 2023/24 Xinjiang cotton production is very likely to reduce, while the yearly decline is hard to say, which is needed to pay attention to the weather condition and actual procurement later. Moreover, due to the excessive ginning capacity in Xinjiang, there is strong expectation of competition for seed cotton in new season. Currently, the mainstream purchase prices of seed cotton is 7.5-8.5yuan/kg and new cotton costs are about 17,000-20,000yuan/mt. If the seed cotton purchase prices are within 8yuan/kg, new cotton costs are below 19,000yuan/mt. Currently, ZCE cotton is 17,000-17,200yuan/mt and spot cotton prices are around 18,000yuan/mt. If new seed cotton prices can be within 8yuan/kg with ginning yield of 40%, new cotton costs will be settled soon, and ZCE cotton futures may reflect actively and then be plain. If the seed cotton prices are higher, ZCE cotton may go upward further.