Chinese cotton prices lie low in new season

31 Oct '11

2 min read

Since the beginning of the new cotton season, China's prices of seed cotton, raw cotton, cotton yarn, first moved higher but later dropped lower this year, since farmers are reluctant to sell cotton and cotton enterprises are not willing to purchase.

Textile enterprises are reluctant to buy cotton due to difficulty in sales of final products. The entire cotton industry chain is in a wait-and-watch mode, a stark contrast to the sharp and continuous rise of cotton prices over the same time last year.

Experts aver that the main reasons of low cotton prices are that, global cotton production will reach 27 million tons this year, while demand will steadily decline to 25 million tons, showing an oversupply situation.

Second, domestic cotton has realized a bumper harvest; while demand is basically flat when compared with the previous year and the gap between supply and demand has narrowed.

Third, European and American markets are in downturn, due to which demand for cotton textiles has fallen and orders from overseas markets have fallen sharply.

Fourth, domestic labor costs and raw material costs are rising, which has led to Chinese cotton textile enterprises losing their international competitiveness. Overseas orders have shifted to some low-cost countries in Southeast Asia.

Cotton farmers are generally not satisfied with current low cotton price and hence are storing large volumes of harvested cotton in anticipation of getting better prices at a future date.

Fibre2fashion News Desk - China

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