China Cotton Index 328 reached 20,236 Yuan per ton yesterday, which hit 10 years' record high. The increasing cotton price cuts profits of textile enterprises.
It is learned that a videophone meeting will be held among seven ministries next Monday to analyze production and sales of cotton.
According to analysts, several factors lead to the huge rise of cotton price. The first one is the reduction of cotton output. Influenced by world economy in 2008, cotton price during that period was very low, which resulted in the reduction of cotton planting. According to statistics from National Statistics Bureau, the area of cotton planting in 2008 was 86.4 million Mou, decreasing 2.4 million Mou compared to the same period in 2007. The output was 7.5 million ton, declining 120 thousand ton compared to the same period in 2007.
The second factor is the increasing demand of cotton. The recovery of world economy brings a lot of foreign orders to textile enterprises. So the demand of cotton surges. Unavoidably, cotton price increases drastically because of the imbalance between supply and demand.
The third factor is weather. Heavy rains hit many provinces in South China in last three months. It is predicted that the cotton output will reduce by 5% to 10% because of the rain.
The last factor is that some speculate capital enter cotton market to manipulate the price.
In order to stabilize the cotton price, more cotton from stockpiles will be sold. Statistics show that almost 520 thousand ton cottons have already been sold from 10th August to 21st September, which accounts 86.6% of the cottons that be planned to be sold.
