Cotton prices revised, spurred by China stockpile
03/12/2013
In April 2013, the projected price was 118 cents per pound but current midpoint of the forecast range is 88.
China’s reserve and import policies have weighed heavily on international prices. So far in 2013/14, the China National Cotton Reserves Corporation (CNCRC) has bought more than 2.7 million tons, and its total cotton reserves have passed 10.1 million tons. On November 26, CNCRC announced that it would begin selling cotton on November 28 at 18,000 Yuan per ton or 133 cents/lb using current exchange rates, for standard grade starting with its 2011 reserves.
In the past two seasons, China imported much of the surplus stock on the world market, allowing prices to remain relatively high. This season its imports are expected to decrease 40% from last season to 3.1 million tons. The sales price of cotton from China’s reserve is significantly higher than the import price with a 40% tariff.
As was the case for the last three seasons, 2013/14 world production is expected to outpace world consumption with production projected at 25.6 million tons, down by 1.2 million tons from last season. World cotton consumption is forecast at 23.8 million tons, up 2% from last season with an upward revision of 85,000 tons in India from last month.
The International Cotton Advisory Committee is an association of governments of cotton producing and consuming countries.
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