China Cotton Auction: Imported Cotton On Offer Increasing

MUMBAI (Commoditiescontrol): China Cotton Auction: Imported Cotton On Offer Increasing

Quantity of imported cotton once again increased on Friday after three days of dominance by domestic cotton.

Spot Market News

Quality of the reserve cotton, as stated by trading companies, is of good fiber length and miconaire which

can be used in spinning C40S/50S variety. A merchant from Shandong area also added that that the auction

price range between 13300 and 13600 for the 2128/3128 inland variety will still prove to be profitable.

The auction of reserves has also lifted up demand in the spot markets. Mills and traders in Hubei, Shandong,

Hebei and Jiangxi have begun to source good quality inland styles. T3128B is being quoted at 12500 yuan

while some Xinjiang styles are being offered in the range of 12600 and 12800 yuan.

However supply of good quality cotton remains limited on account of sharp reduction in output and quality

in 2015. If import quota is not increased then it is expected that in the coming month’s high quality cotton

will be hard to source.

This has attracted traders and merchants to buy at the auction. Though mills are also purchasing in the auction,

they will wait until their existing inventory is sold before they buy again on account of tight financial conditions.

Auction Quantity

Auction commenced on 3rd May. Cotton being auctioned is that of the years 2012-13 and 2013 - 14.

Total Quantity Offered	Total Quantity Sold	Total Domestic Cotton Sold	Total Imported Cotton Sold
411019.4	408684.6	165969.2	242715.4

Quantity in Metric Tons

From 3rd May to 20th May 408684.60 tons of cotton or 99.43 percent of total quantity offered has been sold in

the auction. Share of Imported cotton sold so far stood at 59.39 percent on Friday down from 60.78 percent

on Thursday, while Share of domestic cotton increased to 40.61 percent from 38.65 percent.

Quantity on offer continued to increase to 27950 metric tons on Friday from 25578.20 metric tons offered

on Thursday. Average quantity stood offered until yesterday stood at 29358.53 tons. Quantity of domestic cotton

offered decreased by 14.20 percent on Friday while imported cotton offered increased by 59.05 percent.

Ratio of Sales To Domestic and Imported Cotton

Ratio of Domestic Cotton after reaching a high of 81.63 percent of the quantity on offer on Thursday fell to 64.42 percent.

Share of imported cotton on offer after dropping to a low of 18.37 percent increased to 35.58 percent. Since 12th May

quantity of domestic cotton offered has been slowly increasing while that of imported cotton has been reduced. Of

the 18065.98 tons of domestic cotton offered 17894.60 tons or 98.49 percent was sold while 100 percent of the 9884.07 tons

of imported cotton was sold.

Auction Turnover And Staple Length

Total turnover dropped on Friday to 99.39 percent from 99.89 percent on Thursday.

Staple length increased marginally from 28.13 MM on Thursday to 28.39 MM on Friday.

Auction Price

Average auction price bounced from the lows on Friday. Average price yesterday stood at 12124 yuan per ton or $0.909 per pound

which was a increase of 0.31 percent.

Highest selling price increased marginally by 0.08 percent to 13160 yuan while lowest selling price increased by 1.16 percent

to 10430 yuan. Lowest selling price has been increasing over the past two trading days.

Floor Price For Week 23rd To 27th May

Floor price for the coming week has been fixed at 11884 yuan per ton up by 45 yuan as compared to the previous week’s

floor price of 11839 yuan per ton.

Today’s Offer

Offer quantity has been increased further today to 30071.77 metric tons. Floor price has increased to 11884 yuan.

1st Session – 15008.46 tons will be offered of which 9857.45 tons will be of domestic cotton while the remaining 5151.01

tons will be of imported cotton.

2nd Session – 15063.31 tons will be offered of which 4481.11 tons will be domestic cotton while 10582.20 tons will be of

imported cotton.

Exchange Prices With Volumes

ZCE Cotton September

ICE Cotton July

Impact

Imported quantity is once again taking centre stage with state reserve increasing the quantity on offer. This has also led to

steady increase in the lowest selling price.

Buoyed by the response state reserve has increased the floor price this week and also increased the quantity on offer

to 30000 tons today after three trading days.

ZCE futures which was sharply down today, has generally been moving higher. Reports from spot market also point to

continued support both for auction by trading companies and increased spot market activity.

Thus as long as imported quantity is being offered and the quality of domestic cotton on offer remains good, the auction

will continue to see turnover above 99 percent. Shortage of imported cotton in the market is clearly visible and fresh crop

arrival estimates to come in will take another month or so.

Thus price outlook for cotton in the near term continues to be for further increase.

(By Commoditiescontrol Bureau; +91-22-40015522)