China's cotton prices will remain high in the new 2010/11 crop year although the output in its biggest producing area is likely to rise, the China Cotton Association said in a report published on its website on Thursday.
Farmers are expecting high cotton prices due to rising producing costs, while mills are ready to buy the new crop actively, prompted by good profits in 2009/10, said the report, which is based on a recent field trip to Xinjiang, China's biggest cotton producing region.
Benchmark 2011 May cotton futures contracts traded on Zhengzhou Commodity Exchange have risen 10 percent since mid July to close at CNY18,185 per tonne Thursday. The association estimated cotton output in Xinjiang would rise to 3.10 million tonnes this year, slightly higher than the 3.07 million tonnes it produced last year.
Xinjiang accounts for almost 40 percent of China's total cotton output. However, industry participants expected China's cotton output to fall this year due to heavy rains nation-wide. "It would be good enough if (China's) cotton output is the same as that of last year," said Dong Shuangwei, an analyst with Capital Futures.
Shandong province, also a big cotton producer, has been suffering from rainy weather recently, and the crop quality is worse than that of last year as a result. China will harvest its cotton later this month.
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