July 22, 2012

At a work conference held on Wednesday (July 18), Hou Zhenwu, vice general manager of the state cotton stockpiler China National Cotton Reserves Corporation (CNCRC) said that the country will not set upper limits for the volume of the government's cotton stockpiling in the crop year of 2012-13.

The country has planned to begin the cotton purchases for state reserves from September 6 if market prices are lower than the minimum purchase price of CNY20,400 (US$3,200) per tonne for three consecutive days.

Given the tepid consumer demand, the current soft prices of cotton are unlikely to be changed in the short term. Analysts predict that the government will kick off cotton purchases at the early period of 2012-13 marketing season beginning from September 1.

According to the CNCRC, eased supply pressure of home-grown cotton and the state stockpiling plan will help stabilise the cotton market, but lacklustre procurement from textile enterprises is likely to suppress rise of cotton prices.

By July 13, the national cotton price index CCIndex 328, which indicates the average price of standard lint in China, stood at CNY18,449 (US$2,894) per tonne, down CNY743 (US$117) per tonne or 3.9% from that at the beginning of this year.