China's 2009-2010 Cotton Demand Outstrips Domestic Production, Group Says

Demand for cotton in China, the world’s largest buyer and grower, outstripped domestic production by 3.6 million metric tons in 2009-2010, widening a supply deficit, the China Cotton Association said today.

The gap increased by 2.6 million tons from the previous year, the group said, citing Zhang Xiaoqiang, deputy head of the National Development and Reform Commission.

“A recovery in the textile industry coupled with a drop in production because of lower income from cotton planting has resulted in a relatively big change in the demand and supply balance,” the association said, citing Zhang in a government meeting on cotton.

China’s domestic cotton production fell by 14.7 percent to 6.4 million tons in the year ended Aug. 31, Zhang was quoted as saying. Yarn production expanded by 16.6 percent in the same period to 26.41 million tons, driving a total demand for cotton to 10.6 million tons, he added.

China has sold the natural fiber from government stockpiles in auctions to bridge the supply gap, offloading 1.1 million tons during September and December and another 230,000 tons between Aug. 10-31, Zhang said. The country’s cotton imports jumped 73 percent from a year ago to 2.51 million tons.

Standard cotton prices in China have climbed 29.3 percent in 2009-2010 to an average 15,724 yuan ($2,347) a ton, pacing the gain in the international cotton market, the report said.

More Sales

China will auction a further 300,000 tons to 400,000 tons of cotton from state reserves to satisfy demand from the textile industry, industry researcher cncotton.com said yesterday in a report.

The country will release the additional cotton following a decision to sell 600,000 tons starting Aug. 10, the report said.

Cotton in Zhengzhou reached a record of 22,000 yuan a ton today as supplies tightened on increased demand for yarn and reduced output. Prices have climbed 28 percent since the government started auctioning state reserves on Aug. 10.

--Feiwen Rong. Editors: Richard Dobson, Tan Hwee Ann.

To contact Bloomberg News staff for this story: Feiwen Rong in Beijing at +86-10-6649-7563 or frong2@bloomberg.net

To contact the editor responsible for this story: Jim Poole at jpoole4@bloomberg.net

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