China Cotton Reserve Auction Update
Yuan Associates has provided three reasons that the auction should not have a major impact on the market.
-The key intention of the auction is to improve the quality of the national reserve through rotation.
-The auction will satisfy the mills’ structural demand for low quality cotton.
-The flexible mechanism of the auction and the expectation of an incoming reserve refill will provide support for the cotton price.
Many individuals believe that the auction will create more space for China to purchase U.S. cotton, in order to trend towards meeting the Phase One Trade Agreement. The Chinese government has not confirmed these speculations. See the document below for the full report.
