China Cotton Auction: Week On Week Sales Declined By 4.31 Percent

MUMBAI (Commoditiescontrol): China Cotton Auction: Week On Week Sales Declined By 4.31 Percent

Total quantity sold for week ended 3rd June was 651723.4 tons. Week on week quantity sold decreased by 4.31 percent. Total quantity sold so far stood at 32.59 percent of the 2 million tons the State Reserve intends to auction until end of August.

Week	Quantity Sold (MT)	Week on Week Percentage Change	Percentage of Total Bales On Offer
3rd May to 6th May	120350.7	-	6.02
9th May to 13th May	149750.2	19.63	7.49
16th May to 20 th May	138583.7	-7.46	6.93
23rd May to 27th May	124193.8	-10.38	6.21
30th May to 3rd June	118845.1	-4.31	5.94
Total	651723.4		32.59

Week on week average turnover has been reducing. The first three weeks of the auction reported a turnover of more than 99 percent. Last week average turnover fell to 97 percent.

Week	Average Turnover
3rd May to 6th May	99.34
9th May to 13th May	99.13
16th May to 20 th May	99.86
23rd May to 27th May	98.92
30th May to 3rd June	97

Spot Market Update

Inventory of cotton are being reported to be at record low levels with some of them having no inventory at all. Thus reliance on delivery of the cotton reserves to be on time is high so as to maintain their production schedule. With large mills the case is different as they have inventory level ranging from 15 to 45 days.

The main reason for such inventory buildup is being pointed to the 30-day delay in starting the auction. During the first fifteen days of the delay mills purchased only when they had requirement from the spot market. This along with excess supply in the spot market kept prices lower. However, 15 days prior to the start of the auction, expectation of reserve sales and higher future prices kept physical prices supported. Thus mill buying was lower in 15 days prior to the auction. What surprised the markets in general and more with the mills is the eagerness to procure cotton via the auction. Failure to procure via the auction led to mills picking up from the physical markets.

Shandong mills said during the final days before auction, lower cotton price and steady yarn price brought good margin to yarn sales in domestic market. C40S brings a profit of around 1000 yuan. However, while the delay in auction led to a rise in cotton price, yarn price fail to move much higher, and mills profit fell to 200-500 yuan. At present, cotton yarn prices are little changed, giving some auction charges, actual cotton cost is already much higher. Mills are only able to cover their cost and maintain its workforce and operating schedule.

Cotton being auctioned is that of the years 2011 -12, 2012-13 and 2013 - 14.

Total Quantity Offered	Total Quantity Sold	Total Domestic Cotton Sold	Total Imported Cotton Sold
660360.4	651723.4	350266.6	301456.8

Quantity in Metric Tons

Total sales as on 3rd June stood at 6.52 lakh metric tonnes which is 98.69 percent of total quantity offered. Total domestic cotton sold stood at 3.50 lakh metric tonnes which is 53.74 percent of total quantity offered. Absence of the offer of imported cotton stood caused total imported cotton to remain unchanged at 3.01 lakh metric tonnes.

Quantity on offer was lower on Friday at 19088.44 metric tonnes as compared to 24446.40 metric tonnes on Thursday.

Average quantity offered from 3rd May to 3rd June was 27515.02 tonnes.

Quantity of domestic cotton offered decreased by 19.92 percent while no imported cotton was offered.

Ratio of Sales To Domestic and Imported Cotton

Ratio has been 100 percent domestic cotton and zero percent imported cotton for the past three auction days.

100 percent of the 19088.44 tons of domestic cotton offered was sold.

Auction Turnover And Staple Length

After a dismal beginning on Monday, Friday ended on a high with all what was offered being picked up in the auction.

Staple length of cotton on offer improved as well on Friday leading to turnover being 100 percent. Average staple length offered on Friday was 28.22 MM as compared to 26.85 MM on Thursday.

Auction Price

Average auction price auction price too improved as a result of improved staple length. Average auction price stood at 11976 yuan as compared to the low of 11891 yuan on Thursday.

Improvement was registered in both highest and lowest selling price. Highest selling price was higher at 13110 yuan an increase of 0.54 percent. Lowest selling price moved up to 10890 yuan up by 0.65 percent.

Floor Price For Week 6th June To 8th June

Floor price for the week 6th June to 8th June has been fixed at 12199 yuan per ton up by 171 yuan as compared to the previous week’s floor price of 12028 yuan per ton. 9th and 10th June will be holiday’s in China on account of Dragon Boat festival.

Today’s Offering

Total cotton on offer today is at 30392.26 tonnes. No imported cotton is being offered today only domestic cotton.

Ist Session – 15168. 64 tonnes of domestic cotton will be offered.

2nd Session – 15223.62 tonnes of domestic cotton will be offered.

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