China Announces to Dump 500K MT of Reserved Cotton

National Food and Strategic Reserves Administration and Ministry of Finance jointly announced just now. In order to optimize the structure of reserve cotton, ensure the quality and enhance the regulation and control ability of central government. It’s decided that some reserve cotton will be rotated in 2020. The relevant matters are hereby announced as follows:

Reserve dump:

Time: reserve auction will be carried out on each business day from July 1, 2020 to September 30, 2020.

-Quantity: The total amount is about 500,000 tons, with about 8,000 tons offered on each business day.

  • Price. The starting price will be determined dynamically according to the market. It is calculated and determined by domestic cotton spot price indexes and international spot index (cotlook A) according to the weight of 50% respectively, and will be adjusted once a week. During the period of reserve auction, when the domestic market cotton spot price index is lower than 11,500 yuan / ton, auction will be suspended from the next business day; when the domestic market cotton spot price index exceeds 11,500 yuan / ton for three consecutive business days, auction will be restarted on the next business day.
  • Platform. Reserve cotton will be offered and bid through CNCE e-trading platform. sold in the national open market.
  • Classing. The quality and weight of the reserved cotton will be inspected by China Fiber Inspection Bureau(CFIB).

Calculation Formula of Reserve Dump:

-Weekly starting price – domestic cotton price indexes of last week X 50% + international spot cotton price index X 50%

  • Domestic cotton price indexes = (CCI + CN cotton B) ÷ 2
  • International cotton price index = cotlook A (usd/ton) × exchange rate × (1+ import cotton tariff 1%)× (1+ VAT 9%)
    1.  (exchange rate = the rate on the third Wednesday of last month)  
  • CCA (China Cotton Association Q’s quality P&D will be used for auction.

Reserve Buying:

-Related department shall select another time to arrange the reserve buying, according tot he actual reserve selling and the supply/demand situation of the cotton market. The specific details will be announced separately as soon as possible.

More Advocacy Issues

Yesterday, the Commodity Futures Trading Commission’s (CFTC) Agriculture Advisory Committee, led by CFTC Chairman Rostin Behnam, held a meeting to discuss three main topics: futures margining and the agricultural markets, the impact of Russian-Ukrainian war on wheat futures prices, and global events impact on the futures market. ACSA President and CEO Buddy Allen took the […]

Read More
 

Yesterday, the Senate Banking, Housing and Urban Affairs Committee held a hearing on “AnnualOversight of Wall Street Firms,” which centered around the Basel III Endgame Proposal. ACSA recently signed onto a letter stating our opposition to the proposal. Republican Members and witnesses alike generally stated that the proposal’s capital requirement increases will create a burdensome […]

Read More
 

Below, Delta Strategy Group shared an overview on where things stands in Washington, D.C. when it comes to the status of a government shutdown and the recent removal of Kevin McCarthy (R-CA) as Speaker of the House. In September, Congress reached the brink of a government shutdown due to conflicts within the Republican party. Members […]

Read More
 

Please click here for the Comments on the Supplemental Notice of Proposed Rulemaking Establishing the Definition of Unreasonable Refusal to Deal or Negotiate with Respect to Vessel Space Accommodations Provided by an Ocean Common Carrier.

Read More
 

On December 7, 2022, Commodity Futures Trading Commission (“CFTC”) held an Agricultural Advisory Committee (“AAC”) meeting to discuss topics related to the agricultural economy and recent developments in the agricultural derivatives markets. ACSA President/CEO Buddy Allen and Chairman Tommy Hayden of Louis Dreyfus Company both serve on the committee. Summary here.

Read More
 

On September 14th, the House Ways and Means Committee held a hearing titled, “The Future of U.S.-Taiwan Trade.” There were four witnesses, including Texas Farm Bureau President Russell Boening. Summary here.

Read More