In this week’s Georgia Cotton Commission update we will update you on the recent events in the cotton market. The last couple of weeks have seen a slow but steady rise in the futures price of cotton. This past week saw a sharp increase with the nearby contract getting close to 80 cents and the December ’17 contract going above 75 cents for the first time. Most analyst point to the March 6th start date of the 2017 Chinese Reserve Auction as causing this price jump. From May through August of 2016 the Chinese government began their first round of daily auctions to sell some of the cotton in their reserves. The 2016 auctions had a daily cap of 138,000 bales with a yearly total of just over 9 million bales. There was a noticeable jump in the market last year throughout the course of the auction. The 2017 auction quantities are expected to be around the same daily amounts with the Chinese government stating they’d like to sell about 30,000 tons per day, which is about 120,000 bales/day. Initial reports indicate that they are selling at that pace. The National Cotton Council has some good YouTube videos explaining the Chinese Reserve Auction program.
Click the links below to hear Dr. Jody Campiche explain the situation.