Things were good for the Chinese cotton industry last year, with the country’s national reserve buying domestic fiber from ginners and merchants at a rate much higher than the international market would bear. But all cotton and textile professionals have learned that the outlook can change rapidly, and last year’s smooth sailing is getting a little more difficult recently, according to Galaxy Futures.
The cotton purchasing price in the southern part of the autonomous region of Xinjiang is very unpredictable. The average price of cotton with a 40% lint percentage is 64 cents/lb to 66 cents/lb, down about 1% mostly due to the decline in prices on the Zhengzhou Commodity Exchange (ZCE) and rumors about increasingly strict classification practices of the China Fiber Inspection Bureau.
Today, offers for seed cotton (40% lint percentage, 11% moisture content) in Aksu are about 65 cents/lb, but farmers are not actively selling due to dissatisfactions with the price.
Meanwhile, in Korla, no more than 10% of cotton is being classified as grade 2. Insiders say that on one hand, the inspection agency has gotten tougher in its standards, while others say it’s not that the standards have changed, but rather, that the moisture content of the local seed cotton is relatively higher. One ginner sent 16 batches cotton to national reserve and had nine of them sent back due to problems with quality, moisture and tags. Overall, it seems like it’s getting harder for ginners to sell to the China National Cotton Reserve Corporation, which is making ginners more cautious.