Cotton Rally May Fail to Boost Area in China as Input Costs Worry Farmers

China’s cotton price rally this year may fail to spur more planting next season as farmers are concerned about market volatility and high input costs, the China Cotton Association said, citing its own survey.

China’s cotton prices have almost doubled this year to a record 33,720 yuan ($5,071) a metric ton on Nov. 10, before tumbling 19 percent amid government efforts to crack down on speculation and rein in inflation pressure.

“Cotton is a labor-intensive crop, that’s why the volatile prices and high input costs such as labor and raw materials have prevented farmers from greatly increasing the acreage,” the association said, citing a survey done in November among 1,700 farmers in 12 provinces.

Planting may rise by 11.7 percent in 2011 along the Yangtze River and by 4.9 percent along the Yellow River, respectively, the survey showed. The association didn’t mention farmers’ planting intentions in Xinjiang, China’s biggest producer.

China’s cotton output may fall 5.5 percent this year to 6.36 million metric tons after rain and cold weather damaged crops, according to Cncotton.com, a research company.

Demand in China is forecast to outpace supply by 17 million bales in the year ending July 31, the U.S. Department of Agriculture forecast on Nov. 9. Stockpiles in the U.S. are predicted to fall to 2.2 million bales this season, down 25 percent from 2.95 million last year. A bale weighs about 480 pounds, or 218 kilograms.

To contact the reporter for this story: Feiwen Rong in Beijing at frong2@bloomberg.net

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

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