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Cotton markets in a stupor
Sep '08
According to the September report recently released by China Cotton Association, there was a fresh arrival of cotton in the market by the end of August.

The initial purchase price for seed cotton was soaring at about 5.9 yuan per kilogram which was hard to accept in light of the weakening textile industry, continuous decline in offtake of cotton lint and a fall in prices of cotton by-products. As such enterprises are now adopting a cautious attitude while making cotton purchase.

Presently, the market is in dilemma as to determining the actual purchase price and both buyers and sellers are adopting a wait and watch attitude. The cotton purchase period is therefore expected to last longer and is likely to get delayed compared to the previous year

As of now, purchase price of cotton has declined from 5.8 yuan to about 5.4 yuan per kilogram. Besides, due to significantly higher costs in agricultural inputs and labor this year, cotton growers are expecting to derive higher prices for their output.

In fact, they are unwilling to sell their harvest until prices are remunerative which has turned the cotton market in to a state of stupor. Farmers believe that price should be at least over 6 yuan per kilogram which is same as the level of last year.

Domestic price for cotton has been on a consistent decline for the past six months and is showing no signs of rebounding. As such, market has not witnessed a significant rise since 2006.

Fibre2fashion News Desk - China

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