China to increase cotton stocks to rebuild national reserve


BEIJING (Commodity Online): The global Cotton stocks likely to rebound to 11.9 million tons by the end of 2011-12 after two seasons of relatively tight global stocks and more than 40% of gain in global stocks this season could take place in China as it rebuilds its national reserve, according to International Cotton Advisory Committee (ICAC).

ICAC not that the lack of demand for cotton and ample supplies are putting pressure over the price of the commodity.

Between October 8 and December 30, 2011, a total of 2.1 million tons of domestic cotton were purchased for the China national reserve. Daily purchases are continuing.

In addition, it is reported that about one million tons of non-Chinese Cotton has been bought for the reserve; this cotton will be shipped to China over the next few months and the national reserve, which was almost exhausted by the end of 2010/11, could grow by at least 3 million tons or 11% of 2011/12 global production.

But tha lack of demand for cotton in the midst of ample supplies are putting downward pressure on prices. The Cotlook A Index dropped from 114 cents/lb in early August 2011 to 93 cents/lb in late December 2011.

On India’s National Commodity and Derivative Exchange (NCDEX), Kapas (raw cotton) for February delivery traded down 1.13% to Rs 858.28 and in Inter-Continental Exchange, the commodity for March, traded at 94.99 cents per lb on 4th January at 12:05 IST