Cotton prices remained extremely stable in the last month of 2005 in China. From a maximum of 14,173 yuan per ton on 1 December, benchmark 328 grade fell to 14,121 yuan on 9 December before steadily increasing to 14,168 yuan until the end of the month.
Average level for 328 grade only fell 34 yuan in December from the previous month to 14,145 yuan.
Spinners significantly reduced buying in the last week of the year, still waiting for 2006 import quotas before purchasing cheaper foreign cotton.
Procurement of seed cotton is nearly over. With the harvest now completed, domestic prices could resist any decline in the coming weeks, analysts said.
About 75 percent of this year's production have been ginned by the end of December with 31 percent already purchased by spinners.
Stocks are relatively low at textile mills and more buying is to come in the first weeks of January.
Total production could be 5.53 million tons in 2005-2006, according to latest estimate by China Cotton Association.
This is 30,000 tons higher than expected last month, but 790,000 tons below last year's level, a fall of 12.5 percent.
With consumption expected reaching 9.4 million tons this season, China would need 3.87 million tons.
China's cotton output is however expected rebounding in 2006-2007.
Prices of seed cotton were up 35 percent this year at 2.8-2.9 yuan, compared with 2004.
Grain prices are relatively lower when compared with cotton, in addition. A lot of farmers could switch to cotton. Buying of cotton seeds is already rising from previous season.
