News

Spring pre-sale model with fixing based on an international price on cotton

The possibility of seeking pre-sales of the production already in the spring is seriously considered by large ginning companies operating in areas of central Greece.

According to the report, there are ginners who in the previous period offered offers for fixings in the seed, which slightly deviated from the general rule of 42 cents per kilo that most companies pay. Market participants estimate that this is done in the form of training of producers, in order to adopt a model of cooperation in the standards followed by a ginning plant in Northern Greece.

In this model, the producers after the end of the sowing will conclude futures contracts with the ginners, based on the prices they play in the spring and summer period, for specific quantities of raw material. The baboons will be delivered in the fall at the closed price agreed in the spring.

It is noted that the JMC, which, among other things, provided for the quality premium and price penalties for high humidity, which in fact so far in a few cases has been implemented, includes the possibility of pre-sale of quantities by producers to the ginners.

As a rule, prices on the international cotton market in the post-sowing period are slightly higher than those formed later in the year, however, the market has been extremely vulnerable and volatile for the last two years. In fact, it is recalled that this is exactly the market element that the ginners tried to take advantage of this summer, calling on producers to pre-sell when the price was just over 60 cents, arguing that it will not go up again before 2021, but in reality he denies them.