Weekly Report: Temporary Reserve Surpassed One Million; Seed Cotton Price Stable with Slight Increase

Presently it is the peak season for cotton harvest nationwide, the new arrivals accumulate in increasing volume. According to survey conducted by China Cotton Association, by the middle of October, nationwide harvest processed by more than 70% and seed cotton sales by more than 40%. Cotton reserve trade was active, with running total of more than one million ton, far more than the same time last year. Supported by reserve, seed cotton procurement price edged upward slightly. While at the same time, international price climbed and so was domestic futures price. Spot price was still calm.

During the middle of October, cold air brought precipitation and low temperature to most cotton areas, which was negative for cotton boll opening, picking and drying; fortunately the rain did not last and brought no large damage. According to survey of China Cotton Association of Cotton Processing Branch, the seed cotton procurement price of peak time was higher than earlier time due to its better quality. Around the country, weekly average price of seed cotton typical for type 328 was 8.46 Yuan per kilo, 0.06 Yuan up over the week. Seed cotton procurement was fast in South Xinjiang, Hubei where the quality of new arrivals was better, while the case was adverse in Hebei, Shandong, Shanxi, Anhui provinces where seed cotton quality was unpromising due to early bad weather, so ginners offer relatively low price and farmers unwilling to sell.

The temporary reserve trade of 2012/13 season proceeded with high trade volumes, especially in Xinjiang, the weekly transaction ratio to target volume was 99% in the highest case, and average daily trade ratio was above 97%. By 19th October, the total reserve purchase was 1,153,990 ton, far more than the 10,850 ton the same time last year, and including 908,200 ton Xinjiang cotton and 245,790 ton inland cotton. The PCC reserve auction was still open, and by 19th October the total transaction was 16,832.0397 ton.

Last week (15th/19th October), domestic cotton futures market witnessed rebound, and ZCE cotton futures nearby contract of CF211 settled at 19,315 Yuan per ton, 215 Yuan up over the week; CNCE market had weaker performance, and nearby contract MA1210 has average settlement price of 18,697 Yuan per ton, 65 Yuan down over the week. The domestic lint spot price was stable, CC Index328 settled at 18,696 Yuan per ton, 13 Yuan up over the week.

As for the import cotton, FC Index was settled at 87.5 cent/lb. which was 14,156 Yuan per ton under 1% tariff, 4,540 Yuan lower than domestic equivalent; and 14,972 Yuan per ton under sliding duties, 3,724 Yuan lower than domestic equivalent.