Chinese Ginners Buy in Mass to Achieve Profitability

galaxylogo

Cotton harvesting in Dongguang, a major cotton-producing area in China’s Hebei province, is drawing to a close. Because profit margins are smaller this year than last year, cotton companies and ginners are making their money by buying in larger quantities.

Grade 4 seed cotton is currently being offered at 63 cents/lb (38% lint percentage, 11% moisture content), and cotton seed is sold at 17 cents/lb. The cost of grade 4 lint is around $1.44/lb (2% loss, with a $98/ton processing fee), and the reserve buying price for Type 428 (grade 4, length 28mm) is $147/lb. Those numbers show that the profit of selling cotton to government is around $68.85/ton, which is much better than selling on spot market. Ginners report that they have been accepting lower margins and relying on scale to make up for the smaller margin.

There has been a rise in seed cotton prices because:

  • there are more qualified ginners;
  • ginners have to pay more money to buy seed cotton from other places because local farmers are holding out for higher prices; and  
  • ginners have been buying better-quality cotton to meet the higher standards of the reserve.

They are currently trying their best to speed up the ginning process and sell cotton to government to realize the revenue. The spot market is sluggish, with local grade 3 cotton being sold at $1.42/lb, grade 4 at $1.39/lb, and grade 5 at $1.23/lb – all of which are essentially unchanged since last week.

For more information, please contact Jihong at Galaxy Futures.

Leave a Reply

Ginning Stories
Ginning

EWR’s eCotton Now Connected with John Deere API

February 24, 2017

EWR’s eCotton software is now connected with the John Deere Operations Center through John Deere’s API services.

Ginning

Fountain, Byler Receive National Ginner Awards

February 15, 2017

Kent Fountain and Rick Byler are recipients of national ginning awards for 2016 from the National Cotton Ginners Association.

Ginning

Craft to Lead National Cotton Ginners Association

February 9, 2016

Ron Craft of Plains, TX, is the 2016 president of the National Cotton Ginners Association.

Ginning

Colombini, Nevius Receive National Ginner Awards

February 9, 2016

Louis Colombini and Barry Nevius have been honored by the National Cotton Ginners Association for their distinguished service to the ginning industry.

Ginning

New GinFast System Packages Bales without Strapping

January 26, 2016

Signode’s new GinFast bale packaging system protects and contains cotton bales in a single consumable bag without wire or strapping.

Ginning

An Unsung Hero of Ginning Efficiency

May 6, 2015

Don Van Doorn gave the ginning industry 68 years of innovation.

Ginning

Ginner School Registration Now Open

March 16, 2015

Registration and information regarding the three 2015 Ginner Schools – including the first session in Lubbock, TX on April 6-8 – is now available online.

Around The Gin
Product News

Six Greenleaf Nozzles Approved for Use with XtendiMax

February 24, 2017

Six TurboDrop D Series nozzles from Greenleaf Technologies have been approved for use with Monsanto’s XtendiMax herbicide with VaporGrip Technology.

Product News

EPA Approves DuPont’s FeXapan Dicamba Herbicide

February 17, 2017

DuPont has received EPA registration for FeXapan herbicide plus VaporGrip Technology, a low-volatility dicamba formulation for use on cotton and soybean varieties carrying traits that provide tolerance to dicamba and glyphosate herbicides.

Product News

Fourteen Southern States Register Enlist Duo for Use on Enlist Crops

February 14, 2017

Thirteen Southern states have granted state registration of Enlist Duo herbicide for use on Enlist cotton and other crops, following federal registration received in January.

Product News

BASF Application Academy Adds Online Training Module

February 2, 2017

BASF has added an online training module to its On Target Application Academy stewardship program to help increase education of new and advanced herbicide technologies.

Product News

Bayer Offers Shared Risk Program for FiberMax, Stoneville Growers

January 26, 2017

Bayer is helping support the economic sustainability of cotton growers through the company’s 2017 Shared Risk Program for those who plant FiberMax and Stoneville cotton seed.

Product News

Enlist Duo Herbicide Registered for Use on Enlist Cotton

January 13, 2017

The U.S. EPA has registered Enlist Duo herbicide for use on Enlist cotton varieties, beginning in 2017.

Product News

Data Show Yield Gains from Indigo Cotton in 2016

January 9, 2017

Data collected from 2016 trials show that Indigo Cotton – a seed treatment based on naturally occurring, in-plant microbes to help increase water use efficiency – led to yield improvements on testing acres, including an 11% average yield increase in West Texas.

Product News

FiberMax and Stoneville Release New Varieties for 2017

January 9, 2017

Cotton growers searching to match the right variety the right field now have two new FiberMax varieties and two new Stoneville varieties to consider for 2017.

Latest News
Ginning

EWR’s eCotton Now Connected with John Deere API

February 24, 2017

EWR’s eCotton software is now connected with the John Deere Operations Center through John Deere’s API services.

Ginning

Fountain, Byler Receive National Ginner Awards

February 15, 2017

Kent Fountain and Rick Byler are recipients of national ginning awards for 2016 from the National Cotton Ginners Association.

Ginning

Blakemore to Lead National Cotton Ginners Association

February 15, 2017

David Blakemore has been elected 2017 president of the National Cotton Ginners Association.

Ginning

2016: The Year in Ginning

December 14, 2016

U.S. ginners continue to address quality and regulatory issues.

Ginning

Craft to Lead National Cotton Ginners Association

February 9, 2016

Ron Craft of Plains, TX, is the 2016 president of the National Cotton Ginners Association.

Ginning

Colombini, Nevius Receive National Ginner Awards

February 9, 2016

Louis Colombini and Barry Nevius have been honored by the National Cotton Ginners Association for their distinguished service to the ginning industry.

Ginning

New GinFast System Packages Bales without Strapping

January 26, 2016

Signode’s new GinFast bale packaging system protects and contains cotton bales in a single consumable bag without wire or strapping.

Ginning

An Unsung Hero of Ginning Efficiency

May 6, 2015

Don Van Doorn gave the ginning industry 68 years of innovation.

Ginning

Ginner School Registration Now Open

March 16, 2015

Registration and information regarding the three 2015 Ginner Schools – including the first session in Lubbock, TX on April 6-8 – is now available online.

Ginning

U.S. Still Struggles with Contaminated Cotton

March 3, 2015

Growers have a vested financial interest in solving cotton contamination problems.

Ginning

NCGA Honors Kelley, Lange and Maguire

February 13, 2015

The National Cotton Ginners Association honored Richard Kelley, Mark Lange and John Maguire with the association’s top awards during its recent annual meeting.

Ginning

NCC Survey Projects 9.4 Million Acres of U.S. Cotton in 2015

February 7, 2015

U.S. cotton producers intend to plant 9.4 million acres of cotton in 2015 – down 14.6 percent from last year – according to the NCC’s annual Early Season Planting Intentions Survey.

Ginning

2013 Ginning Survey Shows Continuing Trends, Plus a Few Surprises

August 28, 2014

Rather than another “same song, second verse” scenario, the 2013 Cost of Ginning Cotton survey did provide a few surprises for the industry.

Cotton Production

First Certified Cotton Bale of 2014 Delivered to Gin

July 10, 2014

While most cotton growers are battling plant bugs and resistant weeds and watching for first blooms, Sam and Josh Ruiz of La Feria, TX have delivered 2014’s first official certified bale of cotton.

Cotton Production

USDA Announces 2014 Cotton Loan Rate Differentials

April 15, 2014

USDA's Farm Service Agency has announced the 2014-crop loan rate differentials for upland and extra-long staple (ELS) cotton.