Govt may release cotton from state reserves by month end

21 May '09

2 min read

Cotton price for July contract in China's futures market closed at 13,140 Yuan per ton on May 19, more than 8 percent higher from the previous month. At the same time, New York futures prices have also risen dramatically in recent times.

Spot cotton prices in China had stayed put at 13,000 Yuan per ton since the end of April, which had created a great cost burden to enterprises.

The National Development and Reform Commission recently issued a report, pointing out that China had about 1.1 million tons of commercial cotton stocks as of the end of April, less than two-month's consumption of the domestic textile industry.

The industry is expecting that the state will release some cotton from its reserves at an appropriate time. Analysts advise that, the amount to be released should be no less than 500,000 tons, and price should be not lower than 13,000 Yuan per ton.

They also forecast that the time frame for release may be, by end May or early June. In China, state policy guides cotton market trend. The state purchased a large volume of cotton in the earlier months to help farmers.

The government will take care to ensure that, the release of cotton stocks does not suppress the current market prices and it will it take care to ensure adequate supply in the market and support the textile industry to maintain stability of cotton prices.

Fibre2fashion News Desk - China

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