资讯 1 10 英文网 307 Feature 563888 Cotton spike in China has profound impact on market 2016-10-13 15:17:46 yangfang
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Cotton spike in China has profound impact on market
2016-10-11

Muqeet Bokhari of Icotton.Ltd has BBA & MBA degrees from USA and been associated with the textile industry for over 21 years & currently based in China. He has hands on experience of running and working in ginning, spinning, knitting and weaving industries. He also has global exposure of developing textile related businesses.

 

 

Chinese cotton prices have significantly risen during stocks auction and early part of the season.

 

Initially when the Chinese cotton price started going up it pushed the rates in Pakistan, India & NY to follow the trend, resulting in up to 30% increase in the price of yarns.  During this period main beneficiaries were spinners from Pakistan and India because their raw material was already procured and their domestic season was over, but the sudden jump helped them cash on the opportunity.  This craziness was not real and lasted till the arrival of new crop in respective countries.

 

Early this season cotton rates are rising again but not making the same impact on international prices.

 

This brings up a few questions:

 

Why is Chinese cotton moving up at this time of the arrival?

Maybe a smaller inventory with domestic spinning mills is causing panic buying to cover a safe stock level.

Speculators in the market creating unnecessary lift to make extra buck.

Reduction in Chinese cultivated land for cotton may have resulted in crop size below the expected level.

 

What will happen to international cotton prices?

At this time of the season even a lower than expected crop size usually doesn’t make an impact on price unless importers come into the market.  In current situation if China opens up its import register it will make a difference and international prices of cotton will move upward.

 

Who will benefit?

Chinese farmers, if their yield is above or at par with expectations based on the target price or subsidy given by the government.

Speculators, who are giving price a push to keep it in the positive.

Cotton exporters, if they get inquiries start coming earlier than expected.

 

Who will bear the loss?

Spinners, if raw material price is not balanced with yarn price.

Weavers / knitters, if yarn price move up and beyond the cost of fabrics.

Garment manufacturers, if cost of fabric makes the garment price uncompetitive.

 

It’s too early to predict how this cotton season will shape up, but we will surely be watching new episodes of the cotton seria