Cotton linter keep going strong in line with cottonseed

Cotton seedprice keeps setting new records by becoming stronger during the transition period. Supported by cottonseed cost and falling operating rates of cottonseed oil plants, cotton linter prices maintain relatively high level.

1. Cottonseed price keeps going up

Cottonseed price increases notably amid limited supply in the later period of 2020/21 crop year. Now cottonseed price in Xinjiang is at 3,280-3,340yuan/mt and that in Shandong and Hebei is around 3,600yuan/mt, but Xinjiang-origin one is at 3,720-3,800yuan/mt locally.

New supply of cottonseed is limited when a few ginners are running currently and there are mainly stocks available on the market. On the other hand, there is less import of cottonseed affected by national policy and biosecurity. In the first four months of 2021, China imports 7.405kt of cottonseed, up 272% on yearly basis, but the total volume is still limited. The import is valued at 1.605 million USD and unit price is at $216.8/mt. US and Myanmar are the major origins.

2. Cotton linter price keeps relatively high

More cottonseed oil plants have stopped procurement with continued rising price of cottonseed. The operating rate is generally at low level and cotton linter supply is reducing. Coupled with support from cottonseed cost, cotton linter producers are eager to quote firmly. However, thin demand and inactive trades restrains the uptrend of cotton linter.

To sum up, it will be a longer time before new cottonseed arrives in Sep and some plants keep raising prices by holding back cottonseed. Moreover, the limited import volume is hard to restrain the price increase in the short term, so cottonseed price keeps hitting new highs. To cottonseed oil plants, there are more risks of procuring high-priced cottonseed and some have stopped procurement. The price of cotton linter is expected to remain high temporarily.