News Flash

Aggressive fibres: cotton & China

21 Jul '06

2 min read

Australian Wool Innovation Limited (AWI) announces that while the world cotton area has been estimated to increase slightly for the 2006/07 season, weather conditions, particularly in Northern Hemisphere (since plantings are almost complete in this region) are critical to these estimates.

Anecdotal reports from the trade have suggested that China's crop is off to the worst start in 5 years. Last month's dry weather conditions took a heavy toll on the crop in West Texas. In India, timely Monsoon rains have improved the situation in some areas.

A lack of price direction persists and is doubtless tied to China's recent limited participation in the market, despite cotton's competitive price position against synthetics and wool. Many mills in China were reported last month to be hamstrung from the lack of available import quota.

The Chinese government has continued to resist releasing new quota in an attempt to support its cotton farmer's income. If Chinese manufacturers are unable to source cotton at competitive prices, they may begin to substitute cotton with other fibres and consequently may keep the lid on international cotton prices and demand, despite the tighter supply.

First established as a subsidiary of Australian Wool Services in 2001, Australian Wool Innovation Limited (AWI) became a fully independent public company limited by shares and owned by Australian woolgrowers in 2002.

Our mission is to drive research, development and innovation that will increase the long-term profitability of Australian woolgrowers.

Australian Wool Innovation Limited

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