Cotton linter market gets off to a good start after the Spring Festival

After the Spring Festival, cotton linter market continued to extend the strong momentum, with prices rising further. Currently, the price of cotton linter in China local market has once again broken through the five thousand yuan mark, reaching a relatively high level compared to one year ago.

Due to the low prosperity of the breeding industry, the market for meal products continues to be suppressed. Since the sharp decline in the prices of soybean meal and cottonseed meal in Sep last year, the weak trend has not changed. Cottonseed oil is also lackluster dragged down by demand, making it difficult for cottonseed oil mills to gain profits in the processing. Therefore, under the pressure of losing money, the enthusiasm for production in cottonseed oil mills has been low since Q4 2023, leading to a decrease in operating rates and cautious procurement of cottonseed. At the same time, it is difficult for delinting plants to sell cottonseed, restricting the overall run rate, and making cotton linter prices "easier to rise than to fall."

Due to the continuous weakness in the oil and meal market, the shutdown rate of cottonseed oil plants has increased, leading to a reduction in cottonseed demand, making it difficult for delinting plants to sell cottonseed, thereby constraining the operating rates Therefore, the season that originally belonged to the arrival of new cotton linter in Q4 2023 has seen an opposite trend of rising prices due to the difficulty in witnessing intensive arrival of new linters. Currently, the sources of delinting plants are limited, and cotton linter price continues to rise, which is around 5,000yuan/tm for industry-grade refined cotton outside Xinjiang, and 4,500yuan/mt in Xinjiang, ex-works (offers are higher), with an increase of about 700yuan/mt since Sep of 2023.

In summary, due to the weak oil and meal market, cottonseed oil mills are operating at a loss, the enthusiasm for cottonseed procurement is not high, overall demand is weakening, making it difficult for delinting plants to sell cottonseed, restricting the overall run rates. Therefore, cotton linter price keeps firm with less supply. Until the deadlock in cotton by-products is broken, the quotations will continue to be firm.