Weekly Report: New Arrivals Come to Market; Cautious Mood Prevailed

During last week, new arrivals come to the market at low selling price, which drove the domestic cotton futures downward. As reserve cotton release approaches the end, transaction rate climbs slightly. International cotton price moved upward in contrast. Weather conditions last week were positive nationwide and regions in the north of Yangtze witnessed cotton boll opening. The sporadic new arrivals in Hubei province are sold at price around 6.7 Yuan/kilo. At this very beginning of seed cotton selling, this is not a universal price. With selling price lower than expectation, cotton growers are unwilling to sell; at the same time, ginners are very cautious to buy with negative market outlook.
The cotton harvest peak will come in middle and late September, while the seed cotton selling peak season probably will be postponed in this uncertain market. Xinjiang target price reform implementation scheme is under the final procedure and will be announced soon. The cotton planting acreage statistical work is at the final stage. According to the latest statistics in Xinjiang, CCA adjusted the national cotton acreage to 63.4 million mu (4.23 million hectare) and projected the cotton yield of the season for the first time. In the suitable weather in July, the national cotton production estimated to be 6.73 million tons, which indicates a bumper year if no disastrous weather happens later of the season.
As reserve cotton auction will close soon, transaction percentage climbed up slightly, which is still constrained by insufficient demand, bear market outlook and inventory risk. For the week, reserve cotton sold of 87,600 tons, 16.1% up over the week. By 22nd August, the total reserve sell had reached 2.56 million tons, by transaction percentage of 21.3%. CPP cotton auction sold of 2,555 tons, 5.9% by transaction rate.
As new arrivals entered the market, domestic cotton spot price declined further. CC Index 3128B settled at 17,001 Yuan per ton at 22nd August, 120 Yuan down over the week. This sluggish spot market is based on cautious market outlook of cotton and textile companies. As for import cotton price, FC Index settled at 79.65 cent/lb., 0.85 cent up over the week.