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State raises cotton reserve plan
Nov '08
China Cotton Reserves Management Corporation announced on October 29, 2008, that the state decided to increase cotton reserve plan to 1 million tons, including both Xinjiang and Inland cotton under the new system. This reserve volume is much larger than previous expectation of 200,000-500,000 tons.

Minimum protection price for the new reserve stands at 12,600 yuan per ton. The key aim of this state control is to help farmers attain basic security. Seed cotton price is close to 5.4-5.6 yuan per kilogram, and is calculated at about 12,600 yuan per ton.

However, as of October 30, cotton spot price in China was still less than 12,000 yuan per ton, seed cotton price was around 4.2-5.30 per kilogram.

On October 29 itself, the daily reserve plan of 20,000 tons cotton was completed in less than three minutes, with average trade price at 12,600 yuan per ton.

This was just the start of the 1 million tons reserve project. Next day, the purchase of the daily reserve plan of 14,200 tons was completed

By the end of August this year, Cotton Reserve Company purchased more than 80,000 tons of 2007 growth through open auction. Meanwhile, by the end of October it acquired 220,000 tons new cotton of 2008 growth.

Experts say that, nevertheless it still remains to be seen whether the 1 million tons of reserve purchase plan could bring in real benefits to farmers.

Fibre2fashion, News Desk - China

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