Weekly Report: Low Confidence toward New Harvest due to Concerns on Market Outlook

As new arrivals are around the corner, gins and seed cotton agents are preparing for purchase money and equipment for seed cotton buying. Though the target price policy was announced and the cotton price is predicted to restore to the market level, the largest uncertainty of the massive state reserve with undecided timeframe for sell and price, leveled the market risk and affected seed cotton buying confidence, moreover, the sluggish cotton demand globally also pushed the futures price downward, Zhengzhou cotton futures fell continually and the major contract of 1501 decreased to 14,115 Yuan.
Apart from the pressure of reserve stock, the financial funding difficulty also adds concerns to the cotton companies. As the reserve purchase was closed, some banks planned to increase credit security deposit and also the company buying capital ratio, which caused large management risk to companies. The inland ginners, who used to go to Xinjiang for ginning business, have already lowered their expectations and contract fees for ginning operation lines.    
Last week (7th -11th July), nationally cotton is in flowering period, some cotton in Xinjiang, Henan and Hubei is still in squaring stage. The weather condition in most of the North is good for cotton growth.
Domestically the lint sales declined continually, CC Index 3128B settled at 17,273 Yuan per ton on 11th, 45 Yuan down over the week. The reserve release transaction totaled 60,000 tons, 2.7% down over the week, by 11th July, the total reserve trade had been 2,164,500 tons, 23.49% of the transaction percentage, including 2,035,900 tons of domestic cotton and 128,600 tons of import cotton.
As for import cotton price, FC Index settled at 84.99 cent/lb. 3,75 cent down over the week.