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High grade cotton to face artificial shortage in short term
Feb '09
Cotton prices have declined all the way in the new cotton season of 2008-09, a repeat of the trends witnessed in 2004. The state has embarked on an unprecedented cotton procurement policy, under which it has purchased 2.72 million tons of cotton, in order to protect the interests of cotton growers and stabilize cotton prices.

From amongst the procured cotton, the purchase price of 2.5 million tons is 12,600 Yuan per ton, nearly 20 percent higher than the market prices prevailing at the time. A majority of the high grade cotton procured is expected to be sent to the reserves stores of the government all over the country.

This is expected to create an artificial shortage of high grade cotton in the short term, till the day the government decides to sell its reserve stocks of cotton. The procurement is expected to touch 4 million tons, which is apart from the 894,000 tons of cotton issued against tariff import quotas.

All this quantity put together, is expected to put pressure on additional cotton imports brought in under floating tariffs in 2009.

Fibre2fashion News Desk - China

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