China to Undersell Cotton Reserves to Stabilize Prices
Source: Sinocast LLC Date: 2007-07-16
The cotton reserves are 300,000 tons, including 180,000 tons of reserves of 1995-1997 period stored by China National Cotton Group Co., Ltd., with floor price of CNY 11,000 per ton, and 120,000 tons of 2001 and 2003 storage by China National Cotton Reserves Corporation, with floor price of CNY 13,000 per ton.
The buyers are restricted to textile cotton consumers.
Analysts say the State plans to stabilize the rising price of cotton.
In March and April, when the State granted export quotas for cotton, the domestic prices were still low, homegrown consumers have not procured cotton from the global market. Since mid-May, the international prices began to swell, they certainly had no intent to import cotton. However, because the supply was limited, domestic prices then grew fast.
Experts predict, in the eleventh Five-Year Plan period, China need to import cotton for 4.5-5.5 million tons, by then, China will be more dependent on foreign cotton.
Cotton will come into the market earliest in September. In July to August, China’s reserves of cotton will go through the hoop. China National Cotton Exchange is to undersell the first group of cotton reserves on July 16.
