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China to issue more cotton import quotas

China Cotton Association, is all set to boost cotton imports by issuing additional import quotas to mills, a move seen by the market as another step toward meeting the demands of top exporters. The association, which lobbies the government on behalf of cotton farmers and processors, said the soon-to-be-released additional quotas were one of the measures the government was taking to help ease recent market volatility. It is also workable to maintain a steady cotton supply by issuing additional import quota.

China’s domestic cotton futures have rallied nearly 18 per cent since early April, fueled in part by worries over crop damage from heavy rains, as well as by heavy speculation. Given a sharp increase in 2017 production, CCA estimate 2017/18 cotton production at 6.05 mil tons, up 22.5 per cent. Due to previous stagnancy in cotton sales, new crop supplies are still abundant in the market channel. China’s commercial cotton stock is estimated at 2.87 mil tons, an increase of one mil tons from a year ago.

As reserve stock declines, relevant department has made initial plans at the beginning of the year to increase cotton import once demand strengthens or severe price movement occurs. Given the current situation, CCA learned from relative department that government will issue additional quota for textile mills in the near term.

The China National Cotton Reserves Corporation, which manages China’s state cotton stockpiles, has stated earlier that it would restrict purchasing at its daily auctions to textile manufacturers. Auction can be extended to the end of September as long as there is demand

 
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