China's cotton futures price dives despite huge state purchase
Wednesday, 5 November 2008
BEIJING, Nov 4 (Xinhua): The cotton 901 contract in Zhengzhou Commodity Exchange (ZCE) ended nearly 3 per cent lower to 11,805 yuan/ton yesterday, the record low price since it was traded in the futures market.
To stabilize cotton production for next year, China decided to purchase 220,000 tons of cotton at 12,600 yuan/ton for state reserve in Xinjiang Uygur Autonomous Region in the mid of October and to add the purchase by one million tons on October 29.
But the huge state purchase fails to effectively support the cotton price. Affected by the downturn of textile industry, the cotton purchase was extremely dull on the inland market except for the Xinjiang market, and purchase price of the second-grade cotton fell under 11,500 yuan/ton Monday. The ZCE cotton futures price also dipped to the record low.
According to analysts, the cotton price persists dropping mainly due to global financial crisis' blow on China's textile industry, and the declining cotton market can't be reversed unless textile industry gets better.
To stabilize cotton production for next year, China decided to purchase 220,000 tons of cotton at 12,600 yuan/ton for state reserve in Xinjiang Uygur Autonomous Region in the mid of October and to add the purchase by one million tons on October 29.
But the huge state purchase fails to effectively support the cotton price. Affected by the downturn of textile industry, the cotton purchase was extremely dull on the inland market except for the Xinjiang market, and purchase price of the second-grade cotton fell under 11,500 yuan/ton Monday. The ZCE cotton futures price also dipped to the record low.
According to analysts, the cotton price persists dropping mainly due to global financial crisis' blow on China's textile industry, and the declining cotton market can't be reversed unless textile industry gets better.