Cotton expected price range to be 12500-13000 yuan

03 Nov '06

2 min read

Based on the analysis of the factors at cotton market, some insiders reckon that local cotton price is likely to run within a range of 12500-13000 yuan per ton in a short time.

That is to say, the domestic cotton market stays in a kind of situation with both support and pressure to prevent the price from huge waving.

The current see cotton price of 5-5.2 yuan per kg has been accepted by the market, so if the price slips below the level, the benefits of cotton farmers would not be guaranteed, and it would be no good towards the balanced development of grains and cotton. So the current cotton price would obtain support from the cost.

On the other hand, local cotton price is hardly to go on under the floating duty price. According to the rules of the floating duty quota in 2006, the benchmark price of import quota under floating duty is 12950 yuan per ton.

Looking at the current situation, local cotton procuring price is similar to the above, and is expected to be stable in the future.

In comparison with man-made fiber, market price has evident advantage over synthetic products. For example, the gap between cotton and polyester staple fiber is only 1000 yuan per ton, and the price difference between cotton and rayon staple fiber is over 2000 yuan per ton.

Cotton is more welcomed by textile mills, and that provides some support to cotton price.

The heavy pressure is coming from higher world production, according to the latest report from ICAC, world cotton production is projected at 25.0 million tons in 2006/07, 300,000 tons higher than last season.

Production is forecast to reach record levels in both China with 6.5 million tons and India with 4.6 million tons.

Since neither friendly factor nor adverse factor could get the run upon the market, so for a short time, the domestic cotton market world sticks to a range of 12500-13000 yuan per ton.

Fibre2fashion, News Desk - China

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