China announces cotton buying policy for new season

27 Jul '12

2 min read

The Government of China has announced its cotton purchasing and storage programme for 2012.

As per the programme, the Government will buy domestic cotton at 20,400 yuan/ton during September-March 2012-13.

The new price is 600 yuan/ton more than the price paid in previous season.

During last season, the Government purchased 3.125 million tons of ginned cotton at 19,800 yuan/ton. The procurement for state reserves accounted for nearly half of the total cotton production in China.

The buying of cotton by the Government helped in stabilizing the price of domestic standard cotton in the range of 19,300 yuan/ton to 19,600 yuan/ton from the end of last year to about March this year.

In comparison, the price of cotton imported from other countries prevailed at lower rates. While the average price of US cotton was 14,416 yuan/ton, the price of Australian, Uzbek and Indian cotton was 15,148 yuan/ton, 15,280 yuan/ton and 13,810 yuan/ton, respectively.

As a result, several Chinese enterprises preferred to use imported cotton instead of locally-produced cotton, which had higher price, was of lower quality and had high freight charges.

Industry analysts estimate that the volume of state purchasing and storage will be about 2 million tons in the new season.

They expect the Government to hold on to its reserves in order to keep cotton prices and the income of the farmers stable, which would mean that the Chinese textile enterprises would rely more on cotton imports.

Fibre2fashion News Desk - China

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