The Chinese cotton future jumped after traders got banned from September state sales. According to the sources China will ban trading firm from buying cotton from its national reserves during September, said the state stockpile on 4th of August 2017. This attitude is said to be sending local cotton future up to 4% as the market anticipated limited supply of raw material.
This new rule is said to be in action from 4th up to 29th of September and is said to be helpful in meeting the demand from cotton spinning firms, said the China National Cotton Reserves Corporation in the notice posted on the official website of Cncotton.com.
Any non-cotton textile firms who participate in bidding in the daily auctions would be stopped from taking part in future sales, according to the notice. Firms are also banned from reselling cotton bought in the auctions, it added. The most active contract on the Zhengzhou Commodity Exchange was up 3.82% to 15,900 yuan ($2,428.19) per ton at 0309 GMT am Beijing, the highest level in more than three months, and marking the biggest daily gain in more than a year.
Traders have shown an active attitude in bidding on daily auction. Beijing began selling cotton from its reserves on 6th of March and had planned to stop the daily auctions at the end of the month of August. However the extended sales for additional month after price rose amid toughest supply.
