National Development And Reform Commission: Issue Import Quotas Of Preferential Tariff Rates Beyond 2023 Cotton Tariff Quotas

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According to the news from the National Development and Reform Commission on July 21, in order to ensure the cotton demand of textile enterprises, it has been decided through research that the preferential tariff rate import quota beyond the cotton tariff quota in 2023 will be issued in the near future. The non state trade import sliding tax quota of 750000 tons of cotton is issued this time, and there is no restriction on the trade mode.

The futures prices of Zheng cotton this week were higher than last week, boosted by the expectation of tight inventory.

According to the report of the United States Department of Agriculture (USDA), as of the week of July 13, 2022/23, the United States had 15218 tons of net contract of upland cotton (including 15468 tons of contract signing, 249 tons of early contract cancellation), an increase of 190% over the previous week, and an average decrease of 11% over the past four weeks. 52866 tons of upland cotton were shipped, an increase of 12% over the previous week, which was basically flat compared with the recent four weeks. This week, the contracted export volume and shipment volume of American cotton increased significantly on a month on month basis. The data showed a bright performance, which benefited the American cotton market.

Domestic market: The high temperature weather in Xinjiang cotton region continues, and the market output reduction is expected to rise. In addition, the commercial inventory of old crops is still low, and the logic of short-term cotton supply tension still dominates the trend of cotton prices. In addition, the implementation of the intermediate storage cotton rotation policy requires attention to the quantity and specific time of dumping and storage. It is expected that the dumping and storage policy will have limited negative effects on cotton prices.

By the end of June, the commercial inventory of cotton had reached 2.8969 million tons, a month on month decrease of 595900 tons and a year-on-year decrease of 825300 tons. Recently, traders have a strong desire to support and increase prices. Textile enterprises need to choose the best purchase, and the transaction is relatively good. However, the cotton yarn market performance was flat, and the cost of raw materials was still high, waiting for the reserve cotton auction in the later stage.

It is expected that cotton prices will remain strong and volatile next week.