Focus On The Market: The Impact Of The Revised Rules On The Quality Inspection Of Futures Delivery Cotton

Event summary: On April 18, the China Fiber Quality Monitoring Center has revised the Working Procedures for the Notarization and Inspection of Futures Delivery Cotton (ZXF [2022] No. 43) and issued relevant notices. The revised procedures will come into force on September 1, 2024. At the same time, the former China Fiber Quality Monitoring Center's Working Procedures for Quality Notarization and Inspection of Futures Delivery Cotton (ZXF [2002] No. 43) shall be repealed.

Analysis and comments: the main revisions are as follows

First, Xinjiang delivery warehouse futures cotton inspection related provisions (Article 12): before the amendment, according to the requirements of Zheng Merchants' Office, the cotton entering Xinjiang delivery warehouse has completed warehousing inspection according to relevant provisions of Xinjiang. Within 30 days after the public inspection certificate takes effect, the cargo owner can submit forecast application to the warehouse by batch.

After the revision, according to the requirements of Zheng Shangsuo, the cotton entering the Xinjiang delivery warehouse has completed the warehousing public inspection in accordance with the relevant provisions of Xinjiang. After the public inspection certificate takes effect, the cargo owner can submit a forecast application to the warehouse by batch within the validity period of the public inspection certificate and the cotton year. It can be seen that, on the premise of the validity of the warehousing inspection certificate of futures cotton delivery cotton, the time for submitting forecast application is changed from 30 days after the entry into force to the current cotton year, that is, from September 1 to August 31 of the next year. The extension of forecast application time provides more flexibility.

II. Relevant amendments to the application for inspection of futures cotton in mainland delivery warehouses (Article 13):

After the revision, (1) when futures cotton enters the mainland delivery warehouse, the corresponding warehouse shall determine the warehousing date of cotton and submit an application for inspection to Zheng Merchants Exchange.

The cotton produced in Xinjiang, which has been put into the warehouse for public inspection in accordance with the relevant provisions of Xinjiang and has entered the supervised warehouse, may be transferred to the inland delivery warehouse to apply for public inspection of futures cotton if it has not applied for replacing the futures cotton inspection certificate.

For cotton not produced in Xinjiang, if it is determined to enter the mainland delivery warehouse directly for futures delivery, public inspection of cotton of origin may not be carried out in the processing link, but the processing enterprise needs to submit a written application to the inspection agency of the origin according to the facts, including the delivery quantity of cotton, delivery warehouse and other information, and obtain a written certificate issued by the inspection agency of the origin after verification, As the basis for applying for public inspection of futures cotton into the delivery warehouse.

In addition, for the batches of cotton not produced in Xinjiang that enter the mainland delivery warehouse for public inspection, the cargo owner can submit forecast application to the warehouse in batches within the validity period of the public inspection certificate and the current cotton year.

In the revised document, the relevant regulations of Article 13 are mainly improved and revised, in which the relevant process of cotton inspection in Xinjiang and cotton not produced in Xinjiang is divided from the second item in this article to the first item in this article, that is, when futures cotton is delivered to the inland delivery warehouse, the corresponding warehouse will determine the date of cotton warehousing and submit the application for inspection to Zhengzhou Mercantile Exchange. The overall content has not changed much.

(Article 46) For the application for inspection of Xinjiang delivery warehouse, after receiving the task notice from China Fiber Center, the inspection institution shall use the information platform to reissue the futures cotton inspection certificate based on the results of the inspection of the cotton under supervision, and the issuing date of the certificate shall be the same as that of the same batch of cotton under supervision.

Viewpoint: China Fiber Quality Monitoring Center has revised the system related to the notarization and inspection of futures delivery cotton. In the revision of this system, the biggest change is that the public inspection of futures cotton warehousing in Xinjiang delivery warehouse has been completed, and the application forecast time is delayed to the whole cotton year after the certificate takes effect. If the new cotton warehouse receipts are basically declared within 30 days after the warehousing inspection is completed and takes effect before the revision, that means the time for declaration of warehouse receipts is relatively concentrated within that month. After the revision, the change in the time for declaration of warehouse receipts has provided a longer time limit for enterprises to apply for registration of warehouse receipts, that is, buyers can declare at any time during the cotton year, providing more convenience for cotton enterprises.

Since the revision of this system will be implemented from September 1, 2024, that is, the registration of new cotton warehouse receipts in 2024/25 will have a large impact, and the short-term impact on this year's cotton will be limited.