Reduced Cotton Quality in Hunan, Hubei Provinces; Slower Reserve Purchase than Last Year

Around National Day (7th/13th Oct.), cotton nationwide was in boll opening and picking stage. Favorable weather in most northern areas was good for cotton picking and drying. During 9th/12th of the week, northern Xinjiang had rains, which impeded harvest. Fine weather in South was good for picking but Typhoon Fitow brought rainstorm to Jiangsu, Anhui and Jiangxi, caused waterlogs in cotton fields.

According to CCA cotton processing industry, Xinjiang seed cotton of type 2119 equivalent had weekly buying price of 9.40 Yuan per kilo, 0.29 Yuan up over the week; inland 3128 equivalent seed cotton had price of 8.59 Yuan per kilo, 0.15 Yuan up. Ginners in Shandong, Anhui, Jiangxi and southern Xinjiang purchase in fast pace for better quality cotton and balancing the margin with by-products; while in Hunan and Hubei, the reduced cotton quality there due to weather reasons could not meet reserve purchase requirement, which caused selling difficulty, and some ginners bought with high price at early stage confronted losses and stopped buying. Cotton associations of these two provinces handed report to the central government to ask the reserve to cover their cotton.

Recently, reserve purchase speed up slightly, though at slower pace than last year due to more strict quality requirement. By 12th October, total reserve purchase of the season was 245,230 ton, including 191,080 ton from Xinjiang, 77.9% of the total.

As raw material replenishment of textiles went on, the domestic cotton spot price increased. On 14th October, CC Index3128B settled at 19,524 Yuan per ton, 74 Yuan up over the week; ZCE cotton futures nearby contract settled at 20,330 Yuan per ton, the same with last week.

As for import cotton price, by weekend FC Index settled at 97.02 cent/lb., 1.46 cent down over the week.