China recently permitted sales of cotton from its reserves to Chinese mills with a base grade price of $1.32 per pound and the China National Cotton Reserve Corp. (CNRC) announced unlimited purchase quantities of 2012-2013 cotton on the base grade price from Sept. 10, 2012 to March 31, 2013. At the same time reserve sales began, the CNRC began purchasing new crop cotton at the state reserve price of $1.46 per pound.
There is concern that mills may sell cotton recently purchased from reserves back to the CNRC at the higher price for new crop cotton. The National Development and Reform Commission (NDRC) calls this “turn-selling of reserved cotton” and is cautioning China’s mills of serious punishment for such practice.
With polyester selling at approximately $0.75 per pound, China’s pricing policy continues to push Chinese mills toward man-made fiber use.