During the end of February, the market is in the mood of waiting for launch of new seasonal reserve approach. The general predict is that new reserve price will be improved; therefore, gins are active at procuring seed cotton, which is currently ending flowers with relatively poor quality and declined price in certain areas. Domestic e-trade market continues to fall while lint spot price kept rising steadily. Reserve trade rebounds with larger actual volumes.
The provisional reserve price for next season will be launched at the end of February. Ginners reckon that the price will be improved. Such positive outlook encourages them to buy seed cotton actively. Procurement in Yellow River and Yangtze areas has entered the final stage, and the seed cotton market keeps the momentum for the limited resource available in the market. During this week, daily purchase of most ginners is just half of previous week and their procurement is mainly the ending flowers with low ginning outturn percentage and high impurities. Limited seed cotton can meet the requirement of reserve, so procurement price declined slightly. According to CCA processing industry branch, weekly average price for level 328 in Henan decreased from 8.01 of previous week to 7.94 yuan/kilo this week, and in Anhui, it decreased from 8.09 to 8.07 yuan/kilo. In Hebei and Shandong, the seed cotton procurement is basically the same as previous week of 7.78 and 7.97 yuan/kilo separately.
Last week, (20th -24th February), domestic e-trade market went downward, and CNCE MA1203 settled at 20,306 Yuan per ton in average, 165 Yuan down over previous week; ZCE cotton nearby futures contract CF203 decreased 140 Yuan over previous week to 20,500 Yuan per ton at the weekend. Domestic spot price continued to regain its lost ground. On 17th February, CC Index328 settled at 19,623 Yuan per ton, gaining 70 Yuan during the week.
Reserve is still in process, with weekly target of 501,850 ton. The decreased e-trade market brings actual reserve volume upward this week to 72,990 ton, the daily trade volume of which improves by 46.8% over that of previous week. In Inland the reserve volume of the week is 60,630 ton, and 12,360 ton in Xinjiang. By 24th February, total reserve volume was 2,640,870 ton, 1,535,520 ton taken in Xinjiang with the proportion of 58,14%; and 1,105,350 ton in Inland by 41.86%, where the top three volumes taken in Shandong, Hubei and Hebei.
International cotton market has the decline trend this week due to negative economy statistics and cotton outlook. In the weekend, FC Index settled at 101.6 cent per pound, which was 16,358 Yuan per ton under 1% tariff, 3,265 Yuan lower than domestic equivalent; and 16,842 Yuan per ton under sliding duties, 2,781 Yuan lower than domestic equivalent.