China cotton firm teams up with Australian company
China’s state cotton firm, China National Cotton Group Corp (CNCGC), has signed a marketing deal with Australia’s largest cotton processor, Namoi Cotton Co-operative, which has suffered losses despite record production and prices of the fibre, Reuters has reported.
The 50/50 joint venture will market the 2012 to 2017 crops globally, Namoi said. CNCGC has reached a Heads of Agreement on the joint venture with Namoi, the Australian company said.
Namoi recently reported a $58.5 million net loss for the six months to August 31, which it blamed on unprecedented cotton market price volatility and increased borrowing costs.
“The volatility in the price probably has seen other companies caught out too, but many are privately owned and don’t have the same requirement to report losses as Namoi does,” said Belinda Moore, an analyst with RBS Morgans in Australia.
“It makes sense for Namoi to form a joint venture with the Chinese company as China is one of Australia’s biggest cotton customers,” Ms Moore added.
China’s textile industry is the world’s top importer of cotton, accounting for around a third of the world’s traded material, according to the US Department of Agriculture. Australia is the number three exporter of cotton.
