In China, Seed Cotton Prices Stay High, New Cotton Quality Triggers Worries

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In early September, hand-picked seed cotton in China’s South Xinjiang started to arrive and trade on the market, and around September 15, machine-picked seed cotton in North Xinjiang also kicked off its trade.Seed cotton prices have been constantly increasing after the arrivals of new cotton. From September 25, prices fell down somewhat, but have  mostly remained on the higher side.

The reason for the high prices is that ginning capacity in North Xinjiang has risen significantly this year, and ginners are expected to seize the seed cotton actively. In addition, according to current inspection indicators, the quality of new cotton is unfavorable. The ginning yield of machine-picked seed cotton is high, and the length and strength of lint has been affected. The quality in early period is mostly below 28mm and 28gpt.

Seed cotton prices

Hand-picked seed cotton in South Xinjiang
In early September, procurement of hand-picked seed cotton began in South Xinjiang. In early period, the seed cotton is mainly for wadding, and prices have risen from 6yuan/kg to 6.8-6.9yuan/kg, and the ginning costs of lint for wadding are about 14,000yuan/mt in theory. Nevertheless, its selling prices are mostly at 14,000-14,200 yuan/mt by September 24, so ginners that process the cotton for wadding can break even at least, and some ginners with low processing costs may have a profit of 500yuan/mt, which is better than the situation of cotton for spinning. Later, the seed cotton for spinning was procured gradually around September 23, and the hand picking progress is slow, so the purchasing volumes are limited. By September 24, its prices are low at 6.1-6.2 yuan/kg, and ginning costs to lint are around 13,100-13,300 yuan/ mt in theory, which is much higher than the cotton futures, but close to the market price. However, the purchasing volumes remain limited, and prices have not been clear overall.

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Machine-picked seed cotton in North Xinjiang
Machine-picked seed cotton in North Xinjiang starts to be procured successively around September 15, and in early period, prices are mixed, at 5.1-5.5 yuan/kg with ginning yield of 40%. On September 19-23, prices move up quickly, at 6yuan/kg or above with ginning yield of 42-43%. The ginning costs to lint are high at 13,500yuan/mt, much higher than the cotton futures and market prices. From September 24, some ginners in North Xinjiang began to set ceiling price of machine-picked seed cotton, to be no more than 5.65yuan/kg, and the moisture content is no more than 15%, some no more than 20%.

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Therefore, prices moved lower slightly. Nevertheless, as the ginning capacities have risen largely this year, the competition to buy seed cotton is fierce. Prices may remain high. Currently, prices of seed cotton with ginning yield of 40% is lowly at 5.4-5.5yuan/kg, and ginning costs to lint are around 12,800-13,300 yuan/mt on theory.

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New cotton quality
According to the inspection by factories, due to high ginning yield of machine-picked seed cotton, its cotton length and strength is affected, to be mostly below 28mm and 28gpt. The cotton quality is yet not stable at present.

The quality of machine-picked cotton shall be paid high attention. If the cotton quality fails to improve later, then the quality cotton supply may tighten.

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