Texas Tech researchers gauge new Chinese cotton policy shift

Apr 27, 2011 By Norman Martin

China’s textile mill demand for cotton played a critical role in driving cotton prices to a record $2.27 last month, up 175 percent over the year before. But now cotton producers are wary of lower cotton prices in the near future, according to a report from Texas Tech University’s Cotton Economics Research Institute.

The reason: China recently announced a government purchasing price increase both to rebuild their strategic reserve of and increase domestic production. The Chinese government reportedly plans to buy cotton for a so-called “temporary” reserve from Sept. 1, 2011, to March 31, 2012, covering the fall harvest season.

In the new report, “Effects of an Increase in Chinese Government Purchasing Price on the World Cotton Market,” study authors noted that overall it’s projected that a higher government purchasing price in China would increase Chinese cotton imports, Chinese ending stocks and the world cotton price in the first year.

“Whether these effects are sustained over a longer period depends on how many years China will adopt the higher government purchasing price,” said Darren Hudson, Texas Tech’s Larry Combest Chair for Agricultural Competitiveness. “World mill use, however, is projected to decline as a result of a higher world cotton price.”

The impact of the one-year Chinese government purchasing price increase on U.S. farmers is only modest at best, Hudson said. Even if the government purchasing price is extended over a five year period, U.S. farm prices are only 1.2 percent higher on average.

Explore further: Family financing is anything but foolish

Provided by Texas Tech University

3 /5 (1 vote)
add to favorites email to friend print save as pdf

Related Stories

Early cotton planting requires irrigation

Sep 09, 2010

Cotton growers can produce more cotton if they plant early, but not without irrigation. That's the finding of an article published in the September-October 2010 Agronomy Journal, a publication of the American Society of Agr ...

New fibre testing device gives cotton an edge

Mar 09, 2010

(PhysOrg.com) -- A 'fibre maturity' testing device designed to improve the quality of fibre produced by Australian cotton growers and yarn quality in overseas spinning mills has been licensed to new-start ...

ARS Survey Helps Growers Track Two Key Cotton Pests

Dec 01, 2009

(PhysOrg.com) -- Cotton growers will be better able to keep an eye out for two common pests because of a comprehensive survey by Agricultural Research Service (ARS) scientists at College Station, Texas.

Recommended for you

Family financing is anything but foolish

1 hour ago

Borrowing money from a family member or friend to start a business is often considered dangerous, both financially and emotionally, however new research conducted by an entrepreneurial expert at the University of Adelaide ...

The economics of age gaps and marriage

Oct 30, 2014

Men and women who are married to spouses of similar ages are smarter, more successful and more attractive compared to couples with larger age gaps, according to a paper from CU Denver Economics Assistant Professor Hani Mansour ...

Do financial experts make better investments?

Oct 28, 2014

Financial experts do not make higher returns on their own investments than untrained investors, according to research by a Michigan State University business scholar.

Lack of A level maths leading to fewer female economists

Oct 28, 2014

A study by the University of Southampton has found there are far fewer women studying economics than men, with women accounting for just 27 per cent of economics students, despite them making up 57 per cent of the undergraduate ...

User comments : 0

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.