February 23, 2012

China's spot cotton prices rise steadily

In the week ending February 17, China's spot cotton prices remain on a steady rise underpinned by the state stockpiling programme, the China Cotton Association said in a weekly report on Tuesday (Feb 21).

The futures prices, however, fell significantly to narrow the spread with the spot prices.

The national cotton price index CCIndex 328, which indicates the average price of standard lint in China, accumulatively increased by RMB81/tonne (US$12.85) to RMB19,553 (US$3,105)/tonne last week. However, the most actively traded September cotton contract on the Zhengzhou Commodity Exchange fell 2.16% to close at RMB21,705/tonne (US$3,442.26).

With persistent price rise on the spot cotton market, processing mills reduced the enthusiasm in selling lint cotton to the state stockpiler. The China National Cotton Reserves Corp. only purchased 49,720 tonnes of cotton last week.

China began the cotton stockpiling programme on September 8, 2011 after market prices fell below the protective price of RMB19,800/tonne (US$3,140.14) for five straight working days and had totally bought 2.57 million tonnes for reserves by February 17.

Affected by expectation for decline of the US cotton planting area and worries over the Greek bailout plan, the international cotton prices displayed a choppy trend last week, and were RMB2,059-2,537/tonne (US$326.54-$402.35) lower than the domestic prices, according to the report.