Weekly Report: Reserve Cotton Purchase Climbed; Cotton Price Declined both Home and Abroad

1. No.1 Document

On 5th February, the No.1 Document on Three Rural Issues was published and addressed on the key aspects to completely eradicate poverty, which is the 17th No.1 Document by the CPC Central Committee since the 21 century. As for cotton, it asked for improving the Xinjiang cotton target price policy, and increasing import sources to meet the domestic demand for agriculture products.

2. Reserve Cotton Purchase Increased Largely

After Spring Festival, the central government increased reserve cotton purchase volume to ease the market affected by coronavirus. For the week (7th -3rd Feb.), the weekly purchase plan was 67,000 tons, and the transaction rate was 82.99% by 55,600 tons, 38.43% higher than last week. The lowest price was 13,195 Yuan/ton, and the highest was 14,135 Yuan/ton. By 7th Feb., 110,800 tons of reserve cotton was purchased at transaction rate of 32.5% at the highest price of 14,197 Yuan/ton and the lowest of 12,879 Yuan/ton. According to the calculation formula of the price limit for central reserve cotton purchase set by National Food and Strategic Reserves Administration and Ministry of Finance, the price limit for the 11th week (10th -14th Feb.) of 2019 seasonal Xinjiang cotton reserve purchase is 13,715 Yuan/ton (3128B), 420 Yuan lower than last week.

3. Price Decline Home and Abroad

Affected by the coronavirus, most domestic mills prolonged their holiday, and average cotton prices home and abroad all declined. The weekly average price of CC Index (3128B) was 13,466 Yuan/ton, 413 Yuan lower before the holiday. Cotlook A was 76.56 cent/lb,, 2.63 cent lower than the former two weeks. Import cotton price under 1 % tariff was 12,992 Yuan/ton, 474 Yuan less than CC Index (3128B), price under sliding duty tariff was 14,325 Yuan/ton, 859 Yuan more than CC Index 3128B. FC Index M weekly average price was 77.87 cent/lb, 2.59 cent down. The ZCE cotton major contract CF005 was 12,861 Yuan/ton, 904 Yuan down before holiday. ICE nearby cotton futures has weekly average price of 67.47 cent/lb., 2.12 cent down before holiday.