China's capacity for state cotton purchases this year is 4.1 million tonnes, 55 percent of the estimated 2011 cotton output, the China National Cotton Reserves Corp said in a statement on Monday. Selling cotton to the government has been farmers' top priority because processors have refrained from active buying while profit margins are so slim, according to the statement published on the State-owned Assets Supervision and Administration Commission of the State Council's web site.
As of Friday, the government had purchased 1.15 million tonnes of cotton from farmers as part of state purchases that began on September 8. Total domestic cotton output this year is expected at 7.45 million tonnes by CNCRC, up 25 percent from the statistics bureau's estimate of 5.96 million tonnes for last year, based on Reuters' calculations.
Earlier forecasts for the output fell in a range of 7.2 million tonnes to 7.5 million tonnes. The government's daily purchase volume also increased to around 130,000 tonnes from the 24,300 tonnes when the program started. Cotton prices have been falling sharply since the start of this year due to weak textile demand amid a sluggish global economy.