Weekly report: Cotton Target Price Announced

Cotton sowing processed currently in Xinjiang, South of Yellow River region and North of Yangtze region, where the early seedling has already emerged in positive condition fields. The target price for Xinjiang cotton was announced on 5th April, which is a satisfactory price for Xinjiang growers, while inland growers faced challenge with no supportive policy so far; according to survey conducted by CCA, national cotton planting intention estimate continued to decline.
The weather condition in early April was conducive for planting, cotton sowing will commence in full wings during the rest days of April. In Xinjiang, cost decrease in agriculture materials and farm renting is predicted this year to lower cotton production cost after its increase in a row for a couple of years.
Varied responses are received after the announcement of target price. In view of cotton growers, it is well recognized and welcomed by Xinjiang growers, who expect more detailed implementing practices; at the same time worries by inland farmers for price decline in the post-state reserve time, probably will reduce their cotton acreage. Opinions from cotton companies believe that cancel of the reserve purchase probably will cause price variation and more complicate market outlook.
In aspect of futures market, reserve release price change caused much pressure to nearby contracts at the same time the target price provided support to forward contracts. As for spot market, CC Index 3128B settled at 18,515 Yuan per ton, 470 Yuan down over the week.
Reserve cotton release remained the major choice for textiles, by 11th April, total reserve auction sold cotton of 1,024,600 ton, 33.6% of the offered volumes. Cotton yarn mils confronted with declining price and demand. As for import cotton price, FC Index settled at 95.41 cent/lb., 1.68 cent down over the week.