CNCotton: From May 11 to 18, the cotton sales increased in Hengshui, Hebei province while the price remained stable.
T229 was offered at 14,560 yuan per ton (excluding freight, the same below), T328 and T427 were respectively offered at 14,250 yuan per ton and 13,750 yuan per ton. Such a price level has last for 10 days in the region. Meanwhile, the seed cotton price is stabilized at 5.54 yuan per kilogram, though the remaining stock is limited. The cotton seed price ranged between 1.44 yuan and 1.50 yuan per kilogram on May 18.
As the cotton import quota is drying up, mills begin purchase domestic decryptions. Some merchants have raised offering prices, but mills do not accept their offerings. Most mills bargain with cotton merchants by referring the price of imported cotton. Considering the pressure of loan repayment, merchants have to sell their cotton with the price 100-200 yuan lower than their original offerings. As a result, the actual price of T328 is around 14,100 yuan per ton. Anyway, the spot market is more active than before, and the sales pressure upon merchants is being relieved.
A local merchant said that he sold 800 tons of cotton in the ZCE futures market, the other 300 tons sourced from Xinjiang and some other places were also sold to some old customers, but they paid 50-70% at first, and promised to pay for the rest one month later. In order to keep business relations with them, he had to do so.
Insiders point out that the relatively active sales are merely a change of sales strategy instead of the recovery of cotton market. In the face of RMB appreciation, cotton merchants should be cautious of risks from both the capital circulation and market trend. It is necessary to sell cotton in time so as to reduce the pressure of loan.
