The tone was generally negative at last week's 2008 China Cotton Summit and Trade Fair. Most speakers suggested that the average price of T328 (M 1-3/32) would not fluctuate over 500 yuan per ton for the remainder of the season, while many expect pressure from increased cotton imports and weakened domestic consumption to push prices down 100 to 200 yuan per ton from current levels. Such forecasts have come at a time when many ginners and merchants continue to hold cotton in order to receive higher prices -- domestic cotton inventory levels are larger than anticipated. Such expectations provide an unfavorable climate for domestic ZCE futures, resulting in erosion of the forward months price premium.
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