July 15, 2012

China to stock up more cotton on India's unsecure export policy

Unstable export policy of India-European financial situation battles by international commodity firms for dominance is one of the reasons why China will keep piling up its cotton inventory and advise its farmers to produce more food.

Wallace Darneille President and CEO of Lubbock based Plains Cotton Cooperative Association (PCCA) explained reasons behind the cotton price volatility and the need for the Chinese to stock cotton.

Opening his presentation with a slide showing a Chinese man feeding his baby this July squeeze is hurting mills and affects cotton consumption said PCCA President Darneille. Commenting on cotton supply world's cotton carryover is largest ever and will grow. China is holding about one-third of carryover said Wallace Darneille.

According to him China's long term problem is food and they will not dump cotton. Wallace said Chinese government plans ahead for five years and will instruct farmers to grow food crops to feed its huge population this Chinese situation will make the High Plains of Texas to be the centre of cotton universe.

Commenting on current cotton price situation he said US cotton producers cannot make money at December cotton trading at US$0.70. They have to produce at least three bales cotton per irrigated acre and keep cost low to make it through this year. The reaction on this year's cotton among the farmers who attended the meeting was mixed.