China's domestic cotton prices have sharply rallied off the pre-holiday lows, with prices further advancing this week due to increased quality concerns. T229 (GM 1-1/8") prices have now reached an average price of 13,930 yuan per ton, landed the Eastern mills, which is up from a September low of 13,654 yuan per ton. T328 is now averaging 13,448 yuan per ton, delivered the Eastern mills, which compares to an official average price low of 13,109 yuan per ton at the end of September and some local prices of 12,800 to 12,900 yuan. Domestic mills, merchants and ginners have turned somewhat aggressive buyers since returning from the National Day Holiday.
Another sign of the role that a change in crop expectations is playing is found in the local prices in Xinjiang. It has become clear that the Xinjiang crop will not meet early expectations in terms of total output; so this belief, along with the deterioration in the quality of the East China crop, has ignited increased interest in buying Xinjiang new crop. T229 (SM 1-1/8") is now averaging 13,813 yuan per ton in Xinjiang, which is a very firm price, because normally local prices are at a 400 to 600-yuan per ton discount to average Eastern mill-delivered prices due to freight differences -- today, it is at less than a 125-yuan per ton discount. The local price of T328 is 13,500 yuan per ton in Xinjiang, which actually represents a premium to the average Eastern mill-delivered price of 13,448 yuan. This is reflective of the concern over quality differentials between an East China T328 grade and a Xinjiang T328.