China 2009 Cotton Output Forecast Cut To 6.7 Mln Tons

SINGAPORE (Dow Jones)--China is expected to produce 6.7 million metric tons of cotton this year, the China Cotton Association said, cutting its estimate from a previous forecast of 7 million tons.

Production in the biggest cotton-growing region, Xinjiang Uighur Autonomous Region, will likely fall 14%-15% from last year's level, while countrywide output is projected to drop 10%-14%, the association said on its Web site Wednesday.

The main reason for the decline in production is lower acreage, which is down 10%, while unfavorable climate conditions from late August to the end of September also contributed to the fall, it said.

China is the world's largest cotton producer, consumer and importer.

The association released its latest production forecast after cotton prices in some regions surged after the Oct. 1-8 holiday due to speculative buying on talk of a sharp reduction of output and rumors that the government would buy for its stockpiles at a high price.

In a daily auction Wednesday, stocks of last year's harvest were sold at a weighted average price of CNY14,016/ton ($2,053/ton), the highest price since the beginning of the auctions.

A pickup in overseas orders ahead of the year-end holiday season prompted some textile firms to buy more, fearing even higher prices later on, the association said.

However, "there are sufficient supplies on the international market this year...The government won't buy stocks at high prices," it said.

China's National Development and Reform Commission said earlier this week that next year's cotton import tariff quota had been set unchanged at 894,000 tons.

Zhang Xiaoqiang, deputy director of the commission, said last month that the country's cotton production in 2008 totaled 8 million tons, 500,000 tons more than the earlier estimate.