• Linkdin

Cotton futures spells uncertainty

01 Jul '05
2 min read

Though long-term forecast for domestic cotton prices remains uncertain, but short-term forecast indicate prices will remain stable relatively, says industry insider inform.

Currently, cotton spot prices stood at 13, 831 yuan (US $1,666) per ton while it stood at 12,000 yuan (US $1,445) till it reached a high of 13,862 yuan (US $1,670) in mid-May, this year.

It is the spurt in domestic demand from cotton spinners and textile mills that has outstripped the domestic supply, according to Yang Zhaoliang, deputy secretary-general of the China Cotton Association (CCA).

He puts forth this argument for growing prices. Notably, spot price of cotton for the past month, have been swinging.

Production shortfall of 3.2million tons has already been announced by the association with demand in excess of 8.85 million tons and output placed lower at 5.76 million tons.

Another factor is the growing reduction in the cotton acreage, which has shrunk by over 10 per cent from a year back as a number of cotton growers did not get remunerative price.

Weather is another factor, says Yang that must be considered while calculating figures.

The situation has been further aggravated by the textile trade restriction from the US and the European Union.

Lone bright spot in the gloomy future for Chinese textiles and clothings is the Sino-EU agreement over the rate of increase of the country's textile exports over the next three years.

A major breakthrough can be hoped for if Sino-US talks turn in favor of the latter.

However, all this portends for minor price rise or correction in the short runs.

Meanwhile, China Cotton Association looks ahead to formulate winning strategies by arming key cotton producers with up-to-date information. This will help avoid unfair competition and enable companies to gain competitive edge.

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