Announcement Of National Reserve Cotton Collection And Storage

Recently, the State Grain and material reserve bureau and the Ministry of Finance jointly issued the announcement of cotton storage and collection. Compared with previous years, the announcement was released earlier, leaving more sufficient time for enterprises to make delivery and storage arrangements. In terms of quality requirements, the announcement last year required that each batch of white cotton of color grade 1, 2 and 3, length grade of 28mm and above, micronaire value grade B and above, and medium and above specific breaking strength. This year's announcement requires that the proportion of white cotton grade 3 and above, length grade 28mm and above, micronaire value grade B and above shall not be less than 80%. There was no significant change in other items of storage. The contents of the relevant announcement are as follows:

State Grain and Material Reserve Bureau

Ministry of Finance of the People's Republic of China

Announcement No. 2 of 2020

In order to strengthen the management of central cotton reserve, further optimize the reserve structure and improve the quality of reserve, it was decided to rotate some cotton in Xinjiang. The relevant matters are hereby announced as follows:

1、 Rotation time

National legal working days from December 1, 2020 to March 31, 2021.

2、 Quantity arrangement

The total amount is about 500000 tons, and 7000 tons are listed for bidding every day.

3、 Rotation mode

The rotation work is implemented by China Grain Reserve Management Group Co., Ltd. (hereinafter referred to as "CSGC") and is traded through public bidding in the national cotton trading market.

4、 Rotation price

In principle, the maximum limit price (to the warehouse price) is determined dynamically according to the market. In principle, it is linked with the domestic cotton spot price and rises by a certain proportion. It is adjusted once a week. During the rotation period, when the price difference between domestic and foreign cotton exceeds 800 yuan / ton for three consecutive working days, the transaction will be suspended; when the price difference between domestic and foreign cotton falls back to less than 800 yuan / ton, the transaction will be restarted. China Grain Storage Group Co., Ltd. and the national cotton trading market uniformly announced the maximum price limit and the difference between domestic and foreign cotton prices. (see Annex for specific calculation formula)

5、 Quality requirements

6、 Relevant regulations

1. After Xinjiang cotton is delivered to the storage site, China Fiber Quality Monitoring Center shall organize notarization inspection, and issue quality and weight inspection certificates by on-site sampling and 100% inspection (i.e. package inspection). If the results of public inspection do not meet the storage requirements, they shall not be put into storage as central reserve cotton.

2. CSGC, together with the national cotton trading market and China fiber quality monitoring center, formulates and publishes detailed rules for the implementation of reserved cotton rotation, competitive trading, notarization and inspection.

3. In the process of cotton rotation in Xinjiang, if there are significant changes in the cotton market at home and abroad, according to the needs of market regulation and control, the State Grain and material reserve bureau will make necessary adjustments to the rotation arrangement with relevant departments.

It is hereby announced.

enclosure: Calculation formula of central reserve cotton rotation price          

State Grain and material reserve bureau, Ministry of Finance

October 19, 2020

enclosure: Calculation formula of central reserve cotton rotation price

1. The maximum bidding price of reserve cotton in this week (converted into standard grade 3128b) = the arithmetic average of cotton spot price index in the domestic market last week × (1 + 2%).

Among them, the domestic market cotton spot price index = [China cotton price index (3128b variety) + national cotton price index (3128b variety)] / 2.

The price difference of quality grade shall be implemented according to the price difference table of cotton quality published by China Cotton Association.

2. The difference between domestic and foreign cotton price = cotton spot price index in domestic market - Cotton spot price index in international market.

Among them, the cotton spot price index in the international market = kotruk a index (converted into US dollars / ton) × exchange rate × (1 + tariff 1%) × (1 + VAT 9%).

The exchange rate shall refer to the customs tax collection method and adopt the benchmark exchange rate of foreign currency to RMB published by the people's Bank of China on the third Wednesday of the previous month (if it is a legal holiday, the fourth Wednesday shall be postponed).