In theory, the time around the Spring Festival is a light period of the year for trade of cocoon and silk. However, the main contracts of raw silk are still quite active, as 2011 faces more complex domestic and international economic situation, as well as many factors which influence price to run to high levels.
Raw silk contract 11033 started to fall after breaking 400,000 Yuan mark in the second half of December. The contract opened lower and closed at 358,400 Yuan, down 10,900 Yuan or 2.95 percent on the day.
Another main contract 093 fell 10,200 Yuan or 3 percent on the day. The drop of the two raw silk contracts with enlarged trade volume indicates that silk price is still in decline trend, on the other hand, the differences between long and short is still great.
Although it is reported that 2010 national cocoon production is more than 600,000 tons, higher than the previous year, it is sill lower than the peak output of 780,000 tons in 2007.
With the improvement of living standards of Chinese people, silk quilt and textile products are more and more popular, 2011 will still see shortage of cocoon supply, coupled with the era of high prices.
Dry cocoon is therefore expected to maintain high price levels before new cocoon arrives in the market, so cocoon price will show strong resilience against decline.
Fibre2fashion News Desk - China
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