China: cotton reserve planned
China plans to rebuild a cotton reserve in 2011 to help encourage domestic production, the Financial Times has reported.
China is the world’s largest producer of cotton, the newspaper states, but a strong local textile industry also makes the country the largest cotton consumer and importer.
Beijing said it would buy cotton for a “temporary” reserve from September 1, 2011 to March 31, 2012, covering the autumn harvest season.
The reserve announcement comes as farmers across China are planting cotton, and in some cases deciding whether to plant cotton or another crop. The China Cotton Association estimates that cotton acreage will total 540 million acres this year, an increase of 5% from 2010.
“By announcing now that they will build a reserve, the government is sending a very positive signal to farmers about future cotton prices,” Ma Wenfeng, analyst at Beijing Orient Agribusiness told the FT. After global cotton prices fell in 2008, China’s cotton farmers have become sceptical that high prices can last, he added. “Right now farmers have some fears that cotton won’t do as well as they hope this year.”
