GREY:FTPLF - Post by User
Post by
lanaar2on Dec 13, 2011 10:55am
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Post# 19316870
USDA cotton report Dec 12
USDA cotton report Dec 12The report can be found here:
https://usda01.library.cornell.edu/usda/current/CWS/CWS-12-12-2011.pdf
I want to bring attention to page 7:
Falling Harvest Prices in China Possibly Spurring State Reserve Imports
To sum up it says that 80% of chinese cotton farmers do not access market info on cotton. They rely on the price in Q4 to determine the area planted for the next season. If prices are low in Q4, that means they will plant less during the following season. To mitigate the decline in cotton price the chinese gov has been buying a lot over the fall.
Important paragraph:
Cotton producers have reportedly expressed intentions to cut area in 2012 by 20 percent or more from the year before, or more than 1 million hectares. Past experience suggests actual changes will not be as large as these reports. Actual plantings will also be a function of expectations of China’s 2012 floor price guarantee for cotton, and other policy and market developments. Thus, significant uncertainty remains about the level of plantings, but one significant variable— prices—points to a decline, which may be a factor in a high level of foreign purchases for China’s state reserves in a year when domestic purchases are also likely to be high and mill use is lagging.