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Tight supply forces cotton bids to soar

Jul '07
In China, cotton is a staple produce only after food. From the beginning of May 2007, domestic cotton market resources are gradually tightening and cotton price has started rising rapidly.

China Cotton Association official says, particularly since entering June, continued downturn of domestic cotton market price has been rising rapidly. As at June 29, the average price of Chinese cotton price index has increased 800 yuan over that in May, to 13781 yuan per ton, set a new high this year.

China Cotton Association Secretary General Gao fang said, "The main reason is that most of 2006 cotton was consumed rapidly by domestic textile enterprises during the initial months of this year."

For September 2006 to August 2007, China's cotton output was anticipated to reach 6.70 million tons, marking the highest level in history, and price stayed reasonable accordingly. Market was in slow at the beginning of the year and price was around 12,600 yuan per ton.

This led domestic textile enterprises to use more local cotton during the period from beginning this year to May. Subsequently, local cotton stock reduced, cotton supply was restricted, raising the price quickly picked up.

According to statistics, China's total cotton demand in the market is more than 10 million tons, local output this year is about 7 million tons, resulting in a shortfall of at least 3 million tons.

Due to supply tension in domestic cotton market, and certain gap between domestic cotton production and cotton consumption, many businesses have started to shift their procurement of raw materials to imported cotton.

Related experts predict that in the next few months, if wet weather continues across the country, China's new cotton production before September will be affected.

It will bring volatility to local cotton price. In the just concluded China International Cotton Conference, many large firms have started to increase cotton imports.

Import orders of some enterprises have booked through September.

Fibre2fashion, News Desk - China

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