Weekly Report: Seasonal Review: Reserve Policy Dominate Market; Domestic Cotton Price Stable

The cotton season of 2012/13 closed in the context of slow recovery of global economy, slowdown of China domestic economy increase, sluggish textile demand and weak cotton market. Internationally cotton price slipped continually, and domestic price was stable supported by reserve policy, while reserve purchase and release remained the main trade channel for cotton companies and mills. Temporary reserve purchase policy functioned well in stabilizing the market and protecting grower interest; however at the same time, it caused large price gap domestic and abroad, reduced market activity. In order to reduce cost, textile imported large volume of cotton; especially significant increase was witnessed by the full duty cotton import and cotton yarn import.  
Seasonal average price of CC Index 328 was 19,136 Yuan per ton, 23 Yuan up over last season, the seasonal vibration was within 1,000 Yuan per ton. By the end of the season, CC Index settled at 19,155 Yuan per ton, 3.4% up; at the same time, Cotlook A settled at 89.15 cent/lb, 3.1% down over the week. 
Last week, 25th/31rd August, cotton nationwide was in flowering and boll opening period. Weather in most cotton region was positive for crop maturity.
Recently, some mills reduced their cotton yarn price in order to recoup capital and promote sales, but the raw material demand was still week. On 30th August, CC Index328 settled at 19,155 Yuan per ton, 21 Yuan down over the week; ZCE cotton futures nearby contract settlement price was 21,040 Yuan per ton, 45 Yuan up over the week. New arrivals augmented and some big-bale ginners started to purchase. In Xinjiang seed cotton equivalent for the white cotton grade 3 with ginning outturn of 40%, is about 8.85 Yuan per kilo; in inland Hubei province, seed cotton of white cotton grade 4 equivalent, 27-28 mm length, ginning outturn of 37.5%, is around 8.6 Yuan per kilo.
At the same time, import cotton price FC Index settled at 95.14 cent/lb by weekend, 1.45 cent up over the week.