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Insight | Time: Oct 24 2019 2:59PM
Cotton linter market weakens amid falling cottonseed price
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Cottonseed price is falling fast amid new arrival on large quantity as the decline is almost 500yuan/mt. Moreover, cotton linter supply is increasing with prices moving down by 100-200yuan/mt.

Cottonseed has gradually arrived since Sep with prices rising but then going down. New cottonseed arrived around National Day holiday and prices further slumped, especially after machine-picking cottonseed arrived in Xinjiang. Xinjiang-origin cottonseed has fallen to around 1,650yuan/mt from 2,100-2,200yuan/mt in early Sep.

Cottonseed supply is gradually increasing and there is less support from cotton by-products, so cottonseed price has been falling fast since the arrival. In Hebei and Shandong, the price of major areas has dropped to 2,200yuan/mt from 2,700yuan/mt in early Sep. There is deeper decline in the short run as the price has fallen to the comparable 2018 level.

Cottonseed market witnesses deeper and faster price decline amid increasing quantity on the market and expectation of loose supply, dragging down cottonseed oil, cotton dreg and cottonseed hull prices. Cotton linter prices also become weaker. In Xinjiang, linter for industry-grade refined cotton is around 3,000yuan/mt and that for filament-grade CLP and food-grade refined cotton is at 3,200-3,300yuan/mt, down 100-200yuan/mt. Linter for industry-grade refined cotton outside of Xinjiang is at 3,600yuan/mt and that for filament-grade CLP and food-grade refined cotton is at 3,800-3,900yuan/mt.

Cotton linter pulp and refined cotton demand largely depends on cotton linter price trend in the short term, but demand from cellulose ether and nitrocellulose is generally soft as the producers are under strict control amid environmental regulation in autumn and winter as well as influence of industrial periodicity. Cotton linter pulp and refined cotton prices are hard to rise without bulls at present and the operating rate remains low. The price of CLP is around 5,500yuan/mt and that of industry-grade refined cotton M1000 is at 7,900-8,000yuan/mt.

Cottonseed is arriving on large quantity around National Day holiday, especially increasing supply of machine-picking one in Xinjiang with prices slumping. However, the price slightly moves up amid increasing procurement of cottonseed oil and delinting plants.

Cotton linter supply is increasing steadily. Shandong, Hebei and Xinjiang-based plants show tolerable enthusiasm for processing after National Day holiday and the operating rate is going up, so cotton linter and other cotton by-product supply improves, leading to periodic imbalance and weak prices in the short run. However, there is strong restocking demand from cotton linter pulp mills and refined cotton plants, so whether demand will be released intensively is crucial to cotton linter price trend.
[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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