INDIA: Textile industry calls for crack-down on cotton exports

By: just-style.com | 26 November 2010

The Indian government's decision to make 5.5m bales of cotton available for export from the beginning of this month have been criticised by The Confederation of Indian Textile Industry (CITI) for creating an artificial shortage of the fibre for domestic spinning mills.

CITI is now calling on the government not to make any more raw cotton available for export markets during the year.

Registration of cotton export contracts began on 1 October, with the entire 5.5m bales quota snapped up in just ten days. But most of these registrations were speculative, CITI claims.

It suggests that if any of this cotton has not been shipped by 15 December it should not be released for shipment or fresh registration for at least two months. The hope is that by then the amount of cotton arriving in the market will have picked up.

 "The situation can improve only if exports are postponed to the extent possible at this stage," CITI says.

It also suggests that any further registration of cotton export contracts should only be allowed against letters of credit, instead of the previous cash against documents (CAD) basis, for which no documents other than a contract were required.

The group also warns against the introduction of controls on exports or prices of cotton yarn, in the long-term interest of the entire textile value chain. Many spinning mills have export obligations for cotton yarn, it says, especially those in India's special economic zones (SEZs).

Last Friday (19 November) owners and senior managers in around 50,000 manufacturing units across India shut their factories to take part in a nationwide protest against a shortage of cotton yarns and rising prices.

The action, organised by the Apparel Export Promotion Council (AEPC), was aimed at persuading the government to ban cotton yarn exports to ensure there is enough available for domestic producers.

Indian cotton prices in India have more than doubled in the past year, from INR23000 ($501) a candy (356kg of raw cotton) in October 2009 to INR47000 ($1,025) earlier this month.

Source: http://www.just-style.com/news/textile-industry-calls-for-crack-down-on-cotton-exports_id109656.aspx?lk=dm

Cotton Exports to Miss Target; Quality Crop Earns a Premium

AHMEDABAD: Unseasonal rains in Gujarat and Maharashtra are changing all calculations in cotton trade. Exporters who rushed to book export contracts for 55 lakh bales, a maximum limit set by the government, assuming a bumper cotton crop are now finding it difficult to meet their export obligations.

With a fall in quality stock arrivals in Gujarat, Maharashtra and Andhra Pradesh markets, trade sources don’t see a 100% of fulfillment of shipments by December 15 deadline. As a result, there is a Rs 3,000 premium on top grade Gujarat cotton. So far, only 15 lakh bales have been delivered and a major portion of 40 lakh bales is yet to be shipped.

“Due to unseasonal rains, arrivals have been low, creating a shortage of quality stock,” said Tushar Sheth of Cotton Trade India, an Ahmedabad-based cotton portal. “Exporters are in a soup. They have contracted Gujarat-based varieties like Shankar 6 and are forced to pay a premium as prices in state are ruling higher than those in states like Maharashtra,” he added.


Currently, buyers are paying roughly Rs 3,000 premium per bale (170 kg) for the required quality. Shanker-6 variety has been witnessing high demand from the international yarn producers due to its good mic, staple length as well as strength. Besides, a sophisticated ginning industry in Gujarat supplies goods with a very low contamination. Cotton processed in Gujarat contains 1.5-2% of impurities  much lower than the trash content of 3-3.5% elsewhere.

On Thursday, exporters bought cotton at a rate of Rs 44,200-44,500 while Maharashtra rate was lower at Rs 42,500-42,800. Prices made their high of Rs 47,000 during the last week when international market touched its all-time high level. December delivery future at ICE touched a level of 155 cents per lb last week. “There is all chance that exporters would not be able to deliver committed goods as arrivals are low.

Currently, their requirement is one lakh bales per day and arrivals are just half of that,” said Mr Sheth. Arrivals in Gujarat have dropped to just 25,000 bales from the 65,000 bales a week ago. Majority of market yards also closed down their activity till next Sunday. Only three yards  Jasdan, Amreli and Vankaner  were open on Thursday.


Elsewhere in the country, the arrivals decreased to 1.4 lakh bales from the 2.5 lakh bales last week. “Rain has stopped now and arrivals may return to the normal levels. But quality will be an issue,” said a Rajkot-based ginner. Askash Chapdiya, MD of Rajkot-based Fem Cotton, said, “I don’t see shipment above 32-35 lakh bales by December 15 as ginners are not able to produce quality stocks.

The current arrivals are containing higher moisture levels and so ginners don’t get the required output.” Normally, cotton contains 8-9% moisture but new arrivals contain 13-14% of moisture. “Cotton crop has seen big damage during the last week. Standing crop’s colour also turned yellow,” said BK Kikani, former vice-chancellor of Junagarh Agriculture University.

Source: http://www.infodriveindia.com/Export-Import-News/cotton-exports-to-miss-target-6013.aspx

Govt sets $24 bn textiles export target for FY11

Press Trust of India / New Delhi November 24, 2010, 18:50 IST

Buoyed by the surge in outward shipments of textiles in recent months, the government today fixed the export target for textiles in FY'11 at $24.4 billion, 9 per cent more than the previous fiscal.
During April-July, 2010, exports of textiles and clothing products, including handicrafts, increased by 11.5 per cent to $7.57 billion from $6.79 billion in the same period last fiscal, according to official estimates.

"The government has set an overall target of $24.48 billion for exports of textiles and clothing products for the current financial year, compared to $22.41 billion in the last fiscal," Minister of Textiles Dayanidhi Maran said after distributing the Shilp Guru Awards and National Awards to master craftspersons and master weavers here.

Talking about the contribution of the handicraft and handloom sectors to economic growth, he said these sectors possess enormous potential to provide gainful employment to a large number of craftspersons and earn valuable foreign exchange through exports.


Both the sectors together provide livelihood to 12 million people and generate foreign exchange worth more than Rs 10,000 crore for the country.Maran said marketing is key to promoting handicraft and handloom items and the sectors need adequate marketing facilities.

"We need to further broaden the existing marketing infrastructure in the country so that artisans and weavers continue to receive continuous opportunities to sell their products throughout the year without having to face patches of lean demand," the minister said.

In the first seven months of the current fiscal, handicraft exports jumped by 24 per cent to $1.07 billion year-on-year, mainly due to a rise in demand from the US market.

On the other hand, handloom exports registered a growth of 63 per cent to$116.76 million in April-July, 2010-11, vis-a-vis the same period last fiscal.
Textiles constituted nearly 13 per cent of India's total exports, valued at $176.5 billion, in 2009-10.

Source: http://www.business-standard.com/india/news/govt-sets-24-bn-textiles-export-target-for-fy11/117087/on

CORRECTED - NY cotton ends at new top, Fed ease to boost mkt

(Corrects cotton hitting record high to second day in a row, instead of third day)
 * Tight supply, fund inflows propel cotton futures
 * USDA seen lowering China crop estimates next week
 * Fed's quanitative easing to spur further cotton surge
 (Recasts, updates prices, market activity to U.S. close)  By Rene Pastor
 NEW YORK, Nov 3 (Reuters) - U.S. cotton futures rose in heavy trading on Wednesday, finishing at a record top for the second straight day as speculative fund buying boosted prices along with strong Chinese cotton prices and tight supplies, analysts said.

 Bullish fundamentals lured speculative funds into cotton, up more than 75 percent this year. That is the strongest gain so far in 2010 on the Reuters-Jefferies commodity index, far ahead of the record-setting gold market and wheat futures.

 The market is seen getting a further boost over the next few weeks from a decision by the U.S. Federal Reserve to buy  $600 billion of government bonds to resuscitate the flagging U.S. economy.

[ID:nN03287174] Also see [MKTS/GLOB] and [FRX/]  The ICE Futures U.S. cotton market kept pace with a rally in cotton futures on China's Zhengzhou Commodity Exchange, but eased back from session peaks on mild profit-taking.
 "Prices shot to new record highs on the heels of overnight.
 "Prices shot to new record highs on the heels of overnight
prices in China and new record highs for the (Cotlook) A Index," said Mike Stevens, an independent cotton analyst in Louisiana.
 The benchmark December cotton contract CTZ0 rose 1.26 cents to end at $1.3552 per lb, having hit a new record high for the second straight session at $1.392 per lb. The session low was $1.3321. Under exchange rules, the daily limit will revert back to 5 cents from 6 cents on Wednesday.

 Business was heavy. Volume traded reached 65,781 lots, more than 150 percent above the 30-day average at 25,663 lots, Thomson Reuters preliminary data showed. The volume on Wednesday was just below the year high of 67,885 lots set on June 10.

 China's benchmark May cotton contract CCFc4 jumped to 29,980 yuan a tonne, setting a record for a third straight day. The contract last traded at 29,715 yuan, up 1.075 yuan.  The Cotlook A index cotton price, the combined average of  the five cheapest cotton prices in the world plus transport, was quoted at $1.524 on Wednesday, a hefty premium of around 13 cents over New York cotton futures. The A Index normally has a premium of 6 to 8 cents over U.S. cotton prices. It has been running at a premium of 9 to as much as 15 cents during the rally.

 Sterling Smith, an analyst for brokerage Country Hedging Inc. in Minnesota, said the decision by the Federal Reserve on quantitative easing would likely keep the greenback under pressure and boost commodities like cotton among others. "All in all, it means more dollars," he said. "The debt's going to expand. It should lead to a weaker dollar."
"In general ... any commodity that has a good fundamental story is going to have legs on this."
 "It will be bullish for commodities in general --particularly those that are sensitive like sugar, coffee and
cotton that have supply issues boosting their markets."

Cotton rose more than 20 percent in October and has gained over 90 percent since the rally kicked off in July.  "There is a big supply gap at home and abroad," said Yang Guoqi, an analyst with Jinshi Futures in China's largest cotton producing region of Xinjiang.

The market gained more momentum from reports of late rains hitting crop quality in India, the world's No. 2 exporter of the fiber, and expectations the U.S. Agriculture Department may lower China's cotton crop forecast in its monthly supply/demand report due out on Tuesday. "The talk of continuing physical demand, late season rain in Indian cotton fields and speculative exuberance propelled the market higher again," Commonwealth Bank of Australia said in a daily note.

  In technical terms, Thomson Reuters analyst Wang Tao said U.S. cotton prices, basis the second-position March contract, could rise to $1.4116 per lb over the next four weeks as part
of a wave pattern. [TECH/C] 

The March cotton contract CTH1 increased 2.21 cents to finish at $1.3166 per lb, having hit a lifetime peak of $1.3495.

PRICES AT 3:10 P.M. EDT (1910 GMT)
    SETTLE     NET    PCT     LOW    HIGH  CURRENT
              CHNG   CHNG                      VOL
CTZ0   135.52    1.26   0.9%  132.31  139.20   27,582
CTH1   131.66    2.21   1.7%  126.45  134.95   25,101
TOTAL MARKET            VOLUME           OPEN  INTEREST
          CURRENT    30D AVG     Nov 02  NET CHNG
ICE Cotton    65,781    25,663     243,838    -3,250

 (Reporting by Rene Pastorin New York, Naveen Thukral in
Singapore and Niu Shuping in Beijing; Editing by David
Gregorio)

Source: http://www.reuters.com/article/idUSSGE6A205F20101104

U.S. Loses Cotton Subsidy Appeal at WTO By REUTERS

 GENEVA/WASHINGTON (Reuters) - The United States lost an appeal on Monday in its long-running dispute with Brazil over U.S. subsidies for cotton farmers at the World Trade Organization (WTO).
The ruling opens the way for Brazil to seek WTO approval for more than $1 billion a year in sanctions on U.S. imports, which it has suggested it could impose on services or by suspending U.S. intellectual property rights.

In a 184-page ruling, the appeal body, the WTO's top court, recommended that the WTO's dispute settlement body should request the United States to bring its measures into line with international trade rules.
The appeal body backed findings on almost all counts, issued in December last year by another dispute panel, that the United States had not complied with earlier rulings in the case brought by Brazil in 2002.
Last December's compliance ruling confirmed that U.S. marketing loan and counter-cyclical payments had led to an increase in U.S. production and exports of cotton that depressed world prices.
Washington had appealed the ruling, arguing that changes to its farm programs had brought them into line with WTO rules.
The Bush administration on Monday said it was "very disappointed" by the new ruling, suggesting that higher cotton prices made the case irrelevant.

"The United States has not been, and is not, making any payments tied to cotton production. Therefore, there is no basis to say that U.S. payments are today having any impact on cotton prices," Sean Spicer, a spokesman for U.S. Trade Representative Susan Schwab, said in a statement.
U.S. cotton subsidies have become one of the most contentious issues in the WTO's Doha trade talks, which seek to expand world trade and give a leg-up to developing countries.

Developing country producers, especially in Africa, believe the U.S. subsidies depress prices and squeeze their own poor farmers out of the market.

African producers are calling for an 82 percent cut in the round to U.S. trade-distorting cotton subsidies -- bigger than the 66-73 percent proposed for other U.S. farm supports.
Washington has yet to file a counterproposal, but there is strong political backing across Southern states for continued support for the politically influential industry.

The U.S. government paid cotton farmers $2 billion to $4 billion in trade-distorting subsidies in most recent years.But price-linked subsidies have fallen in step with higher cotton prices, which have risen over the past year due mainly to lower cotton sowings and expectations that world cotton demand will increase at a steady cadence.

Based on the spot price of cotton futures in New York, fiber contracts were trading around 46 cents a lb in May 2007. They hit a 12-year top over 90 cents in March and closed last Friday at 65.74 cents.
The U.S. cotton industry said the ruling was "out of date and out of touch with existing market conditions."
"It is simply not the case that world cotton prices are currently suppressed or were ever suppressed," the National Cotton Council said in a statement.

The Memphis-based group also noted that one trigger for subsidies, the cotton target price, had been lowered in the 2008 U.S. farm law enacted in late May.

The new farm law sets the target price for upland cotton at 71.25 cents per lb from 2008, down slightly from the earlier level of 72.4 cents per lb.

But the new law also introduces an incentive of 4 cents a lb for cotton mills, which critics complain is merely a revival of a subsidy eliminated after Brazil's earlier WTO victory.
 
Source: http://www.afma.org/F-Info/More_News/Cotton-060308.htm

Organic cotton demand outstrips supply – Mr Mahesh, Arvind Ltd

 One more informative session at the International Denim Conference, which caught the attention of the stakeholders and industry leaders of the textile sector and the denim industry in particular and kept them captivated, was the presentation by Mr Mahesh Ramakrishnan, Head – Agribusiness at Arvind Limited on ‘Organic cotton & denim’.

Cotton is produced in more than 65 countries worldwide and represents over 2.4 percent of global arable land, involving about 30 million farmers and considering that almost one kilogram of hazardous pesticides is sprayed for every hectare under cotton, cotton consumes, 16% of global insecticide releases – more than any other single crop, Mahesh said.

In 2009-10, India produced 29.5 million cotton bales (1 bale = 170 kg lint) and is home to over one third of the world’s cotton farmers and cotton also accounts for 54 percent of all pesticides used annually – despite occupying just 5 percent of all land under cultivation, he further divulged.


On the other side of the cotton spectrum, organic cotton production which is pesticide free, offers a strong alternative to current production methods, along with which, purchasing decisions made by consumers have the ability to directly impact production methods and thereby both environmental security and social equity. Consumer demand for organic cotton currently stands at between US $3-4 billion, and is growing rapidly, such that demand currently outstrips supply.

The key factors driving organic market development include consumer interest in ‘green’ products, significant expansion of existing organic cotton programs by brands and retailers, like Marks & Spencer, Woolworth, Wal-Mart, C&A and Carrefour.

Global retail sales of organic cotton products have been ascending at a growth rate of more than 35 percent in the last few years, having grown from a mere US $245 million in 2001 to $1.966 billion in 2007 and by touching a staggering $4.3 billion in 2009. As per OE surveys, in 2009, C&A (Belgium), Nike Inc and Wal-Mart (both from USA) are the top three organic cotton consuming retailers globally.


In 2009, 22 countries grew organic cotton and the global total acreage stood at approximately 625,000 acres, sown by around 220,000 farmers and in total produced around 175,113 tons (802,599 bales) and which represents 0.76 percent of overall cotton production. India remains the largest organic cotton fiber producer in the world with an output of 107,510 tons representing 61.41 percent of world organic output.

He continued by saying that, denim is the single largest consumer of cotton accounting for around 17 percent of global cotton consumption.

The he informed about Arvind’s organic cotton program and also its initiative in organic denim. Arvind started organic denim production in 2007, producing one million meters and today it produces eight million meters a year, which is 8 percent of its total production. Wal-Mart, Patagonia, H&M, C&A, Timberland, etc are the major supporters of Arvind’s organic denim initiative.

Arvind’s organic cotton contract farming project is located in the cotton growing belt district of Maharashtra; Akola. From just 2 talukas, 33 villages, 293 farmers and 1,355 acres of cotton acreage in 2007-08 it has now enlarged to 6 talukas, 132 villages, 4,000 farmers and cotton under cultivation, has also surged around 12 times to 16,500 acres.

Fibre2fashion News Desk - India
 
Source: http://www.fibre2fashion.com/news/textile-news/newsdetails.aspx?news_id=92606

India:Organic cotton demand outstrips supply – Mr Mahesh, Arvind Ltd

One more informative session at the International Denim Conference, which caught the attention of the stakeholders and industry leaders of the textile sector and the denim industry in particular and kept them captivated, was the presentation by Mr Mahesh Ramakrishnan, Head – Agribusiness at Arvind Limited on ‘Organic cotton & denim’.

Cotton is produced in more than 65 countries worldwide and represents over 2.4 percent of global arable land, involving about 30 million farmers and considering that almost one kilogram of hazardous pesticides is sprayed for every hectare under cotton, cotton consumes, 16% of global insecticide releases – more than any other single crop, Mahesh said.

In 2009-10, India produced 29.5 million cotton bales (1 bale = 170 kg lint) and is home to over one third of the world’s cotton farmers and cotton also accounts for 54 percent of all pesticides used annually – despite occupying just 5 percent of all land under cultivation, he further divulged.
On the other side of the cotton spectrum, organic cotton production which is pesticide free, offers a strong alternative to current production methods, along with which, purchasing decisions made by consumers have the ability to directly impact production methods and thereby both environmental security and social equity. Consumer demand for organic cotton currently stands at between US $3-4 billion, and is growing rapidly, such that demand currently outstrips supply.

The key factors driving organic market development include consumer interest in ‘green’ products, significant expansion of existing organic cotton programs by brands and retailers, like Marks & Spencer, Woolworth, Wal-Mart, C&A and Carrefour.
Global retail sales of organic cotton products have been ascending at a growth rate of more than 35 percent in the last few years, having grown from a mere US $245 million in 2001 to $1.966 billion in 2007 and by touching a staggering $4.3 billion in 2009. As per OE surveys, in 2009, C&A (Belgium), Nike Inc and Wal-Mart (both from USA) are the top three organic cotton consuming retailers globally.

In 2009, 22 countries grew organic cotton and the global total acreage stood at approximately 625,000 acres, sown by around 220,000 farmers and in total produced around 175,113 tons (802,599 bales) and which represents 0.76 percent of overall cotton production. India remains the largest organic cotton fiber producer in the world with an output of 107,510 tons representing 61.41 percent of world organic output.
He continued by saying that, denim is the single largest consumer of cotton accounting for around 17 percent of global cotton consumption.

The he informed about Arvind’s organic cotton program and also its initiative in organic denim. Arvind started organic denim production in 2007, producing one million meters and today it produces eight million meters a year, which is 8 percent of its total production. Wal-Mart, Patagonia, H&M, C&A, Timberland, etc are the major supporters of Arvind’s organic denim initiative.

Arvind’s organic cotton contract farming project is located in the cotton growing belt district of Maharashtra; Akola. From just 2 talukas, 33 villages, 293 farmers and 1,355 acres of cotton acreage in 2007-08 it has now enlarged to 6 talukas, 132 villages, 4,000 farmers and cotton under cultivation, has also surged around 12 times to 16,500 acres.

Source:  http://www.textileglobal.com/2010/11/indiaorganic-cotton-demand-outstrips-supply-%E2%80%93-mr-mahesh-arvind-ltd.html

Cotton price plunge accelerates as dollar soarsCotton price plunge accelerates as dollar soars

Cotton's losses accelerated on Tuesday as a soaring dollar added to fears for Chinese demand in persuading funds to leave, while producers rushed to make the most of prices which remain high by historical standards.

New York's near-term December lot, freed from limits on daily moves by entry into the expiry process, plunged 9.1% to 110.85 cents a pound, its lowest for more than a month.

At that level, the contract was down nearly 30% from the record high for a near-term cotton lot set nine trading sessions ago.

The March contract fell 6.0 cents, the maximum allowed by the exchange, to 111.79 cents a pound. A close at that level would represent a third successive limit-down finish.

'Bit of an unknown'

Many commodities struggled on Tuesday, as the dollar soared 1.2% against a basket of currencies, undermined by lingering eurozone debt fears and the outbreak of hostilities between North and South Korea.

A stronger dollar, viewed as a safe haven by investors, makes assets denominated in it less competitive to buyers in other currencies.

Cotton's particular fall was attributed to its exposure to China, the biggest consumer, importer and grower of the fibre, which on Monday restated its determination to clampdown on soaring farm commodity inflation
.
The China Banking Regulatory Commission said it would crack down on use of loans for activities such as speculation and hoarding which can artificially inflate crop prices.

"China, and how they will react, is a bit of an unknown. Funds aren't waiting around to find out more," a London analyst told Agrimoney.com.
Reasons to sell
Furthermore, US Department of Agriculture data released late on Monday showed the proportion of cotton harvested hitting 86%.

"While this year's cotton harvest in China is behind schedule, the crop progress report... shows that the harvest in the US is still progressing faster than the average for past years," Commerzbank said.
At Hightower Report, Terry Roggensack said he was hearing that the crop in Texas, America's top cotton-producing state, was "in good shape".

Meanwhile, producers were accelerating to take advantage of prices which, even if well past their peak, were high by historical standards, and up more than 50% over the past year.
And technically, the crop was weak too, with the March contract falling through a key support level at 112.75 cents a pound, the 50% retracement level of the rally, "as if it wasn't there".

Cotton vs sugar

The decline in cotton is significantly faster than sugar's correction from a 29-year high reached in February, when a better-than-expected Indian crop, and the release of European stocks, sent funds fleeing.
Mr Roggensack questioned whether cotton would be able to achieve the same rebound achieved by sugar, which earlier this month set a fresh 29-year top.
"The southern hemisphere looks like having good production. A lot of traders are saying there will be plenty of cotton all over the world next year," he told Agrimoney.com.
"That is different from sugar. There would more reason to buy sugar on the break at the moment".


Source : http://www.agrimoney.com/news/cotton-price-plunge-accelerates-as-dollar-soars--2521.html

Cotton Spinning Industry Reports Continued Growth (Part B)

2010-11-23
According to data collected from 11,934 statistics-worthy Chinese cotton spinning enterprises surveyed by National Bureau of Statistics of China, total industrial production value of the industry increased 27.39 percent y/y to CNY791.811 billion in Jan.-Aug. 2010 ; The value of goods delivered amounted to $63.016 billion, up 29.11 per cent y/y, 2.57 percentage points lower than the Jan.-Aug. 2009 period; The main business income increased by 29.06 per cent to 776.893 billion yuan; Meanwhile, statistics-worthy cotton spinning enterprises have finished the sales production value CNY 777.2 billion, up 27.95% y/y.
Profits
From Jan. to Aug. 2010, profits of main business of the industry jumped 35.98 per cent to 80.668 billion yuan; total profits surged 66.45 per cent to 37.015 billion yuan. In Aug., enterprises in the cotton spinning sector saw their ratio of profit edged up by 0.14% to 4.76%, exceeding to its pre-crisis highest level. The growth was attributed to an increase in domestic sales and market confidence.

Investment
From Jan. to Aug. 2010, China has made an investment of 57.33 billion yuan in cotton spinning and chemical fibre industry, up by 15.08 percent over the same period last year. Cotton spinning industry registered new projects totaling 1303, down 1.7% than that of the Jan.-Aug. 2009 period, according to the Statistics Center of CNTAC.

As long noted, China's robust manufacturing output was largely being achieved through strong productivity of developed eastern provinces. However, over the past couple of years, China has been fastening its grand western development program, to boost the development of the middle and western land. In 2010, although eastern provinces' investment increased, it did so at a much slower rate than the middle and western provinces. Investment realization of Henan, China's biggest province in terms of investment value, totaled CNY10.07 billion in Jan.-Aug.

Prices of materials and yarn
Materials:
With manufacturing slowly recovering amid improving economic conditions, cotton demand has increased prompting more orders among mills. However, with a deficient supply of cotton in the market, prices extend gains since Oct. 2009. China Cotton Index for 328-grade cotton reached at 21890 yuan/ton.
Cotton prices have been spurred in part by a disappointing Chinese harvest, the world's biggest, held back by rainy weather which set back maturity, and quality, in crops particularly in Henan and Shandong in the east of the country. As of mid-October, 40% of the national crop had been harvested, compared with 60% by then in a typical year. Meanwhile, stocks in the US, the top producer, have been run down as lower prices late in the last decade prompted farmers to switch to grains. The USDA on Tuesday cut its estimate for American inventories at the end of 2010-11 to 2.2m bales, the lowest since 1925.
As more and more cotton mills were begging the government to sell state reserve cotton by auction, as well as to give them import quotas for cotton as soon as possible. Accordingly, the government begun to release 600,000 tons of cotton reserves since Aug. 10 2010.

On November 5, 2010, the A-Index hits 160 and the ICE Index rose to 142.3 cents per pound, which are new records for both indices. The International Cotton Advisory Committee (ICAC) reported that the Cotlook A Index averaged 127 cents per pound in October, 21 per cent more than in the previous month and 89 per cent higher than in October 2009.

Chart 4. China Cotton Index for 328-Grade vs the price with 1% tariff vs the price with slippery value tax in Jan. - Sep. 2010
In a good selling situation, viscose and terylene staple fiber prices still keep rising along with cotton prices. During Jan.-May 2010, the average price for viscose staple fibre in China was CNY 3000/ton higher than 328-grade cotton. In Sep. 2010, the average price for viscose staple fibre in China was CNY 400/ton lower than 328-grade cotton. For terylene staple fiber, during Jan.-May 2010, the average price for terylene staple fiber in China was CNY 5000/ton lower than 328-grade cotton. After June, the average price for terylene staple fiber in China was CNY 8000/ton lower than 328-grade cotton.

Cotton yarn & fabric:
As China was experiencing a rising prices of cotton, cotton yarn prices also have increased for different varieties of yarn, the increase occurred since the beginning of the year. Since October 8th, 20s cotton yarn had been at 30,500 yuan/ton and 32s cotton yarn at 31,500 yuan/ton, and both rose to 31,500 yuan and 32,800 yuan respectively on October 18th. Rayon staple fiber (1.67 dtex/38 mm) continued to increase, and rose by 600 yuan on October 18th to 22,500 yuan/ton on October 18th. Spandex (44 dtex) increased by 500 yuan to 56,000 yuan/ton. The impact of soaring prices of cotton had bad influence, because small mills have not enough material inventories and do not dare accept long-term and large-scale orders.
Grey fabric prices remain stable in the beginning two months of 2010, and jumped in March. The uptrend in grey fabric prices continued for much of the May, with prices moving to an elevated trading range. While the broader cotton market has turned more supportive and sentiment more positive, after Sep.5, concerns of further price hikes of cotton yarns in China have weighed on grey fabric prices day by day.

 source: http://www.texindex.com/News/Detail/5116.html