Why cotton linter lackluster when cottonseed bounces up?

Cottonseed price bounces up slightly after shedding as producers become more eager to quote firmly. However, cotton linter sales keep slow amid cautious mood of market participants and prices have been weak.

Seed cotton harvesting in Xinjiang is coming to an end recently and ginners gradually start processing on large quantity, exerting bigger pressure on cottonseed supply. Cottonseed price has fallen after hiking since the end of Oct, especially faster decline since the beginning of Nov and more cottonseed oil plants have stopped procurement accordingly. The price of cottonseed had lost ground by around 700-800yuan/mt by last weekend. However, there is minor rebound this week with improving soybean oil and soybean meal futures.

Commodity market has been cooling down since mid-to-late-Oct and the price of cottonseed and cotton linter has dropped much since the end of Oct and beginning of Nov, especially deep decline of the latter. Besides the influence of macro economy and outside environment, the change of supply-demand relationship is the major cause of price collapse. Cotton linter is the source of cotton linter pulp and refined cotton and refined cotton companies purchase fewer linters on worries over high cotton linter price and huge risks. Coupled with competition with low-priced dissolving pulp and paper pulp, cotton linter pulp mills especially staple-grade ones absorb few high-priced cotton linter and they are under big cost pressure, so cotton linter pulp production has reduced sharply since the second half of year and the consumption of cotton linter has decreased apparently.

Cotton linter price jumped during Jan-Oct when the output was less than demand, but the volume has been increasing since Oct-Nov and the consumption by refined cotton plants has reduced notably, so the price has dived since the end of Oct and early Nov, which will gradually return to be rational.