China to start state cotton reserves from Jul 13, 2022

To promote the steady operation of cotton market, China Reserve Cotton Management Co., Ltd will organize the first batch of cotton reserves in 2022. The state cotton reserves will begin on July 13, 2022, and will end according to market situation and reserves condition. The total reserving volumes are 300-500kt, and the daily volumes will be arranged in balance and adjusted dynamically in principle .

The bidding process will be subjected to a maximum price, which will be settled by the Chinese spot cotton price in prior working day. If the Chinese spot cotton price is below 18,600yuan/mt in the prior working day, the reserves will start, while if the price is higher than 18,600yuan/mt, the reserves will be suspended.

The trading object is restricted to ginning factories under cotton target price scheme determined by the Xinjiang Uygur Autonomous Region and Xinjiang Production and Construction Corps in 2021/2022.

The reserved cotton is required to be 2021/22 Xinjiang cotton, with the proportion of grade-4 white cotton and above, and light spotted grade-1 cotton, length 28mm and above, Micronaire B-grade and above no less than 80%.

Calculation:

The maximum price of reserved cotton (grade-3128 cotton)=Chinese spot cotton price in prior working day

Chinese spot cotton price=(China Cotton Index+CNcotton)/2