Still only sluggish interest in the state cotton auctions in China

The state cotton auctions that have been held every day for nearly two months in China are continuing to generate only sluggish sales. According to industry service CottonChina.org, 63,000 tons of cotton had been sold at auction in total up to Monday, which is only 3.4% of the quantity put to auction. The high auction prices are cited by various market participants as one reason for the low level of interest.

Prices fluctuate between CNY 13,200 ($2,126) and CNY 15,500 per ton, whereas the most-active contract on the Zhengzhou exchange is trading at around CNY 12,460 per ton, notes Commerzbank. US cotton was trading at 62.7 US cents per pound at the close of trading yesterday (equivalent to just shy of $1,400 per ton). In other words, cotton is currently cheaper on the world market even when the import duty of 40% is factored into the equation.