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Record cotton procured in 3rd round of purchase

09
Dec '08

Cotton procurement or market intervention as it is commonly known globally was one of the means for the government to regulate, control and maintain the stability in the cotton markets. In the current year till date, the government has procured cotton three times from the market to support the tripartite interests of cotton enterprises, textile enterprises and cotton farmers.

In the first round which took off on August 19, the government purchased 150,000 tons of cotton from Xinjiang province at a predetermined price of Yuan 13,400 per ton for delivery at Xinjiang and Yuan 13,600 per ton for delivery at warehouses located in inland areas for standard class 328 grade of cotton. The objective of this round was to bring an impetus in sales of the white gold.

The second round conducted from October 16 onwards was able to procure 220,000 tons of cotton at a price of Yuan 12,600 per ton (delivery Xinjiang) for the same quality of cotton as in the first round. The main purpose behind organizing the second round was to ease the deadlock between the cotton buying enterprises and farmers.

The third and final round till date, carried out on October 29 is probably the biggest round of cotton procurement in history and was able to purchase 1,000,000 tons of cotton. The procurement price was the same as in the second round and the target of the round was Xinjiang and inland cotton with the rationale being to help solve reduce inventory levels of farmers and infuse some momentum in the gloomy cotton market.

The National Development and Reform Commission has gone on record to say that the state will consider introduction of further measures, including adjusting the quantity and timing of cotton imports, if cotton prices decline further.

Fibre2fashion News Desk - China

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