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China's major cotton producer faces high inventory pressures

China's major cotton producer faces high inventory pressures Source:
Date: 07-11-2011
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China's major cotton production base in the far western region is expected to have a good harvest this year, but the lack of processing facilities and smooth transportation is increasing inventory pressures, industry insiders say.

Amid a good harvest, government agencies and private firms have purchased 1.23 million tonnes of cotton from farmers in Xinjiang Uygur Autonomous Region by the end of October, up 240 percent compared with the same period last year, according to official statistics.

But insufficient local processing capacity, sluggish demand from textile enterprises and poor railway transportation combined to build up inventories in Xinjiang, traders said.

About 732,000 tonnes of Xinjiang's cotton need to be shipped out of the remote region, but only less than one third of that amount had been transported by late October, they said, adding that the cut in the number of cargo trains is to blame for the transportation strain.

About one third of China's cotton output comes from Xinjiang, which is estimated to produce 3.42 million tonnes of cotton this year, up 17.4 percent from a year earlier. About 60 percent of the cotton has been harvested, traders said.

China is the world's largest cotton producer and consumer. Figures from the National Statistics Bureau show the country produced 5.96 million tonnes of cotton in 2010. This year's figure is expected to top 7.28 million tonnes.

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