CNCIC: If China’s Weather Is Stable, Prices Will Be, Too
Chinese cotton futures are down a little bit from the previous week, but barring unexpected weather events, prices should remain fairly stable for the time being.
August 1, 2012
This week’s unconfirmed news that China’s Reserve would be selling some of its cotton while simultaneously adding import quotas caused the Zhengzhou Commodity (ZCE) cotton futures price to flutter somewhat, dropping about 1.8% from the previous week, according to the China National Cotton Information Center (CNCIC).
On the spot market, most of the cotton was sold to the reserve system, but ginners do not have a much stock to spare. With the approach of new season, the reserve’s policy has made gins reluctant to sell their cotton. The market also will be sensitive to weather changes, since China is in its national flood period (late July through early August).However, barring dramatic and unexpected changes in the expected weather patterns, cotton prices in China should remain stable in the near future.
On the macroeconomic front, China’s National Bureau of Statistics reports that profits earned by large industrial enterprises in January through June 2012 was down 2.2% from the same period last year – which was actually a slight improvement over the 2.4% drop experienced from January through May of this year
At the same time, according to related media reports, as previous government projects were approved, four major commercial banks (the Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China and China Construction Bank) granted about 50 million loans in July, an appreciable increase from the month before.