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The Boom of Cotton prices Leads to a Substantial Increase in Global Chemical Fiber Consumption

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大资本网址2016。07。23

大资本网址July 13, the December contract of ICE Futures rised in value to 74。78 cents in early trading, which was the raising limit。 It was the highest in two years and the amount of increase more than 10% within two trading days。 Later the price fell after rise。

 

According to an analyst from Commonwealth Bank of Australia, USDA monthly expects that global ending stocks falls to a low point within five years. Although the decrease of inventory in the market is in expectation according to the pace of the sale of China's Cotton Reserves, but the reduction is double more than market expectation, which makes the market more surprising. At the same time, the extreme temperatures in US cotton-growing region also prompt the traders to do more.

 

However, the Netherlands Rabobank reminded that, the cotton prices will be faced with barriers from competition after the rapid rise. Although short-term shortages of market supplies provide support for the cotton price, the high price will promote the factories to adopt alternative varieties, thus leads to trouble in the rise in price. Although this situation will not happen immediately, we must be aware of this trend in the next few months.

 

Many traders and brokers are puzzled by the rapid rise in cotton prices. In these days, the exchange has been concentrated in the December contract, which was mainly speculative buying rather than commercial buying. Chairman of well-known cotton traders Eastern Trading, Jordan Lee said, there is no good reason to explain such a rise; the current market demand is very depressing and the high prices will not last for a long time, because many US cotton farmers have sold out the cotton produced this year.

 

 In recent years, the market share of cotton has been occupied by chemical fiber. The soaring cotton prices in 2011 led to many textile mills’ turning to other alternative varieties. Besides, the falling oil prices led to a substantial increase in global chemical fiber consumption.

(Source: Asian Textile Association)

 


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