2015/16 state cotton reserves sales will commence from May 3, and last to August 31, 2016, according to the latest news released by National Development and Reform Commission on April 15, 2016.
The total selling volumes will be no more than 2.00 million tons. In principle, daily auction volumes will be no more than 30,000 tons and reserved imported cotton will be sold first.
The base selling price is confirmed to be set at the average price of international cotton and domestic cotton, which will be adjusted every week.
Base selling price (cotton type 3128B)=average price of prior week's domestic cotton prices*50%+average price of prior week's international cotton price*50%.
1. Domestic cotton price=(China Cotton Index+CNcotton)/2;
2. International cotton price=Cotlook A Index (converted to USD per ton)*exchange rate*(1+1%import duty)*(1+13%VAT)
Moreover, according to the NDRC, in principle, state reserves can be sold during March and August every year except during the period from September to February that new crop cotton comes into the market. In the meantime, to optimize the reserved cotton structure, after the auction, small quantity of quality cotton will be reserved into state warehouse, during the period that new crop cotton comes into the market (September to February). The reserving quantity is based on the selling volumes and the supply and demand in the season. In principle, the reserving volumes will be no more than 30% of the selling volumes of last season.