Chinese state cotton reserves a double-edged sword

Up to January 9, the State Cotton Reserves purchased 2.38 million tons of cotton, of which 1.50 million tons were from Xinjiang. It is expected that the State Cotton Reserves may exceed three million tons by March.

Experts opine that the government cotton purchase and storage policy may well be a double-edged sword as the price difference between domestic and foreign cotton is growing.

They have advised the cotton textile industry to guard against a sudden rise in cotton prices, as although it is providing price protection to farmers, in all likelihood they may suddenly rise to 25,000-26,000 Yuan / ton in 2012.