By admin       2018-07-11

On June 2, the China National Cotton Reserves Limited and the China National Cotton Exchange released that non-textile mills were not allowed to take part in the cotton auction from June 4 to the end of the cotton auction (which is scheduled to end on Aug 31, 2018). Then according to the news from China Cotton Association, China would issue additional cotton quotas. The two pieces of news gave the market bearish signal. The selling volumes of reserved Xinjiang cotton have risen before June 4, leaving an expectation of ample Xinjiang cotton, slowing down the mills’ tempo to procure cotton. Meanwhile, the quota policy will increase the cotton supply. It was good news for domestic textile mills and it is also likely to squeeze the market shares of domestic cotton. Besides, the news affected the cotton futures and during June 4-6, ZCE cotton futures market slumped. Nevertheless, after June 4, the selling volumes of reserved Xinjiang cotton have declined quickly and the quality was also unfavorable. In the meantime, 2018 China Cotton Industry Development Summit held on June 7 revealed that China would release additional 1.00 million tons of cotton quotas. If the foreign cotton can be imported on that volumes, it will depress the domestic cotton prices indeed. But the cotton will be purchased from international cotton market. Whether the international cotton market can provide such large volumes of foreign cotton to China?

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