According to the survey of China Cotton Information website, China's cotton stocks in May on average increased to 41.21 days from 38.13 days of the previous month, equivalent to 1.3057 million tons of cotton industry's stocks, compared to 1.209 million tons in the previous month.
Large companies generally hold cotton stocks of more than three months. Therefore, China's cotton supply could basically meet downstream demand this year, prior to new cotton arriving in the markets.
Rapid rise in cotton price and yarn price in earlier times has created a large inventory of stocks; particularly large inventory of yarn and it will take the market a few months to consume these inventories.
From the perspective of supply and demand, supply of high-grade cotton falls short of demand. It will be a trigger for the fall in cotton price, if the state would sell national cotton reserves in the coming days.
2010/2011 cotton acreage is expected to greatly ease the tightening situation of domestic cotton supply and demand, but the uncertainty in cotton yield will affect future trend of market outlook.
If volatility occurs in yields, fluctuation in output would be great. The highest output could be 7.8 million tons, and the lowest could test 6.6 million tons. Judging from present situation, cotton yield this year is expected to exceed normal levels.
Fibre2fashion News Desk - China
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