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State intervention helps stabilise cotton markets
Aug '09
The cotton year 2008 is nearing its end. Under the national macro-control policy, the cotton markets have stabilized from a declining trend witnessed earlier and overall market remains relatively stable.

Textile exports and production indicators of the past two months are showing improvement. Cotton imports touched 1.34 million tons, down 40.6 percent year-on-year in the period, September-July.

The Chinese cotton price index (CCIndex328) averaged at 12,839 Yuan per ton, down 12.3 percent year-on-year and cotton from the new season is going to arrive in the market in a matter of weeks.

The government announced release of another 600,000 tons of cotton reserves in August, in addition to 1.52 million tons announced in May. As of July 31, the state auctions had been able to conduct transactions amounting to 1.21 million tons.

In July, Chinese cotton price index (CCIndex328) averaged at 12,839 Yuan per ton, up 210 Yuan per ton the previous month. Zhengzhou cotton futures and other cotton markets were able to touch new highs.

The state issued 400,000 tons of cotton import quotas for processing trade. In July, cotton imports were 131,000 tons, down 22.1 percent from the previous month, and 38.2 percent year-on-year.

In July, China's cotton from new season entered into flower and boll stages, certain cotton areas saw high-temperature and dry conditions, while other areas suffered rain, little sunlight, wind, hail and other weather disasters.

According to China Cotton Association, area under cotton acreage is estimated at 77.78 million Mu (one hectare=15 Chinese Mu) this year, down 11.8 percent year-on-year, cotton production is expected to be 7.1 million tons, down 8.9 percent.

The state had intervened and purchased additional quantities of cotton from farmers in the previous year, which has enhanced the confidence of all stake holders and they generally expect the acquisition price to be between 5.20-6.00 Yuan per kg this year.

Fibre2fashion News Desk - China

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