Reserve Cotton Release Policy Change Caused Varied Response Domestic and Abroad

Since 1st April, 2014, announced by government department jointly, reserve cotton release implementing practices would have following changes: first, the auction base price for standard grade cotton will be 17,250 Yuan per ton, being adjusted from 18,000 Yuan per ton; second, the sale of reserve import cotton and domestic produced reserve cotton in Xinjiang warehouses will be bound at volume ratio of 3:1, that is mill needs to buy three tons of domestic reserve cotton in Xinjiang warehouse when buying every one ton of reserve import cotton, and 200,000 ton of reserve import cotton is designated for sale; third, reserve cotton purchase volume limitation is removed for mills, but the circulation of which beyond mills is forbidden. In prohibition of reserve cotton fraud trade, mills that purchase reserve cotton from 1st -7th April shall wait till 8th April to take delivery of goods in warehouses. Affected by this news, reserve release trade declined largely to 5,300 ton this week. By 28th March, reserve cotton release during the season totaled 717,500 ton, the transaction percentage was 33.8%.

Last week (24th-28th March), affected by reserve cotton release policy change, CC Index 3128B settled at 19,407 Yuan per ton, 15 Yuan down over the week. Reserve buying was 75,780 ton, 4.5% up than last week, including 17,400 ton from Xinjiang and 58,380 ton from inland. By 28th March, reserve purchase of 2013/14 season totaled 6,274,000 ton, including 4,028,000 ton from Xinjiang and 2,246,000 ton from inland.

During the week, the price indicator for import cotton, FC Index settled at 99.45 cent/lb, 0.06 cent up over the week.