Market Dynamics: A Large Number Of Foreign Cotton Default Due To Soaring Cotton Price

 

According to the feedback of some domestic cotton traders and cotton textile mills, due to the violent rise of cotton in the ice period since mid March, the outbreak of conflicts between Russia and Ukraine, and the impact of the round after round of extreme sanctions launched by Europe and the United States against Russia on the destruction of the global shipping and bulk commodity supply chain, some early signed agreements on American cotton, Brazilian cotton, Australian cotton, West African cotton It is increasingly difficult to implement procurement contracts such as Indian cotton. Among them, the seller delays delivery, negotiates to cancel the contract, or even directly breaches or breaches the contract. The number of arbitration cases has increased significantly.

An import enterprise in Qingdao said that in recent years, most of the foreign cotton purchase contracts agreed on the floating space of the main contract (or spot price of foreign cotton) of ice period (if the price rises or falls by less than 5 cents / pound, the original contract will still be implemented; if the price is higher than 5 cents / pound, the buyer and the seller will negotiate with each other). Therefore, under the premise that the ice period cotton rises by nearly 30% within one month, it is not improper for the seller to restart the contract negotiation; If the contract is cancelled through negotiation, the Seller shall give the buyer some compensation, and the contract shall be repurchased by the seller; If the negotiation continues to implement the contract, and the buyer accepts that the cotton price rises within a certain range, it shall sign the annex to the contract; If the negotiation fails, the case shall be submitted for arbitration.