Govt procurement to push cotton price up

30 Jun '11

2 min read

Chinese Government will be replenishing its state reserves of cotton stock as it has currently diminished to less than 1.3 million tons. At present, the state cotton reserves are less compared to the country's annual cotton consumption of nearly 10 million tons.

Last year, in August and October, China had released about one million tons of cotton from its state reserves. This amount needs to be filled back in reserved stocks to have sufficient strategic supplies of cotton.

An adequate reserve of cotton stock is also needed to hold a regulatory capacity to influence the market. Hence, replenishment of state cotton reserves is expected to be the focus of market attention in the coming months.

The Chinese Government is expected to procure cotton at declining prices prior to the arrival of fresh cotton in August. Further, it is expected to continue its purchasing spree even after the arrival of the new cotton in the market. The prices of cotton will rise as and when the Government will start purchasing cotton.

In the coming months, besides the expected purchase by the Government, demand, weather, and storage are the factors that will determine the price of cotton. However, experts see the price of cotton to be hovering around 25,000 Yuan/ton in the near future and may increase up to 30,000 Yuan/ton in the longer period.

Fibre2fashion News Desk - China

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