Chinese cotton prices are on a strong upward momentum. In October, transactions were mainly among ginners and traders, and traders showed high buying interests on new cotton, while the procurement from mills was bleak. With flat cotton yarn sales, mills procured only slightly more feedstock.
During the week from November 4 to 8, purchasing volumes of mills improved somewhat compared to the prior week. But mills had no plans to purchase much. A few large mills increased the feedstock inventory from 45 days to 90 days, but for most mills the feedstock inventory ranged between 15 to 30 days. Some mills even stopped purchasing after cotton prices moved up. The downstream grey fabric market has shown signs of weakness, so cotton yarn sales are restricted, and mills show a lower buying inclination.
Ginning volumes of new cotton are about 3.62 per cent lower than the corresponding period of last year. Inspection volumes have declined by 5.02 per cent. For spot cotton, about one third and a half of new cotton has been procured by traders and large mills. Meanwhile, due to strong upward trend of ZCE cotton futures previously, some on-call cotton at traders’ hand is locked. Therefore, the available supply of new cotton is reduced.