Subject to RMB appreciation, reduction of tax rebate for textile exports and global economic recession, Chinese textile mills’ demand for cotton has become soft, giving rise to a cotton price decline. But BOABC predicts that cotton price is not likely to drop much in the next few months for the following reasons:
First, domestic cotton shortage. Owing to the government’s emphasis on grain production, cotton acreage is reduced this year. The nation’s cotton production is predicted to be 7.793 million MT this year, 2.81% less than last year. Just in the textile industry, supply is estimated to fall short of demand by 3.325 million MT this year. This may sustain cotton price at a high level.
Second, the government’s policy aims to stabilize cotton price. The government is to hold a national meeting on cotton procurement on Sept. 25, during which measures are likely to be adopted to prevent undue cotton price decline. When supportive measures are issued, cotton price is presumed to pick up gently.
Third, considering many countries’ efforts to rescue economy, commodity price is surmised to stop going south, conducive to a stable cotton price.
|
