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Uncertainties expected to haunt cotton in 2009

31
Dec '08

Cotton hit an all-time high in futures market in early 2008, but also set an all-time low. Impacted by the global financial crisis, commodities have returned to their original prices; albeit even very low as in the case of cotton while supply and demand became dominant factors, demand in particular.

Cotton cultivation areas in China and the United States are expected to reduce in 2009, an influence brought about by shrinking demand and macro-economic uncertainties and China's state reserve procurement plan is expected to mop up as much as 34 percent of the production this year.

Current cotton consumption cost of Chinese textile enterprises is significantly higher than prevailing in global markets as the price of state reserve procurement is high and such a situation is expected to create uncertainties in cotton prices in the future.

International cotton market will face difficulties in 2009. Although U.S. cotton has touched a 4-year low, exports stimulated by price may move back to second place, since the United State will take macro-economic recovery more seriously and preventing heavy imports from China as priority.

In 2009, Chinese cotton market as a whole is projected to sink into a range of 10000-13000 Yuan, with it being expected to remain in floating range of 11500-12500 Yuan during the course of the year, with the biggest variables being state of the economy and new cotton planting acreage.

Fibre2fashion News Desk - China

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