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Cotton prices soar on fears of low output

21
Oct '09
China's domestic cotton price has suddenly soared since October 8, ex-factory price of Xinjiang cotton enterprises has increased from about 13,200 Yuan per ton to 14,000 Yuan per ton within less than a week, landed mill price in inland has grown to 13,600 Yuan per ton and the cotton price index 328 has reached 13,500 Yuan per ton.

Giving reasons for the bullish trend, experts aver that, cotton production of this year will decrease by more than 20 percent due to reduced planting area and yield is also going to be lower due to natural factors, due to which gap between cotton supply and demand will be 2 million tons.

China has become a net cotton importer from a cotton-exporting country since 2004. China imports about 2 million tons of cotton each year. But China imported 1.079 million tons in total in the first 9 months of 2009, a year-on-year drop of 39.1 percent. Cotton supply gap has been offset by imported cotton for many years.

China's cotton price is expected to keep rising for some time and state will also take appropriate policy measures within a few days. The Development and Reform Commission usually takes some time to observe and judge the market, so gestation period of policy introduction will be within 2 weeks.

Newly introduced policy is likely to increase state cotton reserves by 500,000 to 1 million tons, speed up allocation of import quotas, and increase cotton import quotas. Cotton price is expected to drop to about 13,000 Yuan per ton after the introduction of new policy.

Fibre2fashion News Desk - China


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