Update on China Cotton Reserve Purchases

Below is an abstract from our website, the Globecot News Network. Full article can be found at http://www.globecotnews.com/index.htm?inc=22&sid=52328.

After six months of procuring cotton for the state reserve and steadying markets with a steadfast purchase price, China’s mandated reserve procurement program is rapidly approaching its target of just over 2.7 million metric tons. Daily volume continues to ease, sliding to a season-to-date low of just 10,000 tons by April 2. This included 9,200 tons of Xinjiang cotton and 800 tons of inland cotton. The scheduled procurement for April 3 is 14,800 tons, including 10,000 tons of Xinjiang cotton and 4,800 tons of inland cotton, but has not yet been confirmed, given the holiday in China.

Through this date, cumulative reserves now stand at 2,705,750 tons, including 1.5 million tons from Xinjiang and 1.2 million tons from inland regions. With hardly 60,000 tons remaining before the program reaches saturation, daily volume is likely to fade further this week. While rumors continue to swirl, the CNCRC has not indicated whether the government will extend the procurements after it reaches its target in coming days. Such a move would be certainly be welcomed by producers across China and particularly in Xinjiang, but doing so may push market prices higher.