Beijing, 16 October 2010

Record high cotton prices have curbed China's demand for the crop, but prices are likely to stay high over the long run amid tight supply and flush liquidity, industry participants said on Friday. Many small and mid-sized textile companies have already suspended production as they can't afford the high prices, and some cotton traders have stopped buying the crop, they said.

"The high cotton prices have definitely curbed some demand," said a cotton cloth sales executive with a big cotton group in Shandong province, a major cotton producing region.

China's cotton imports in September totalled 201,000 tonnes, up 97 percent from a year earlier, the China Cotton Association cited customs data as saying on Friday.

Indian cotton exporters seek $1.32-1.35 per lb: Indian cotton dealers, buoyed by tight global supplies and healthy demand from China and Pakistan, are seeking $1.32 to $1.35 per lb for Dec-Jan shipments, 14-17 cents over New York futures, three exporters told Reuters.

"Demand from China is good. They are buying at around 132 cents per pound," said Chirag Patel, chief executive officer at Jaydeep Cotton Fibers Pvt. Ltd, one of the country's leading exporters.

Two weeks ago, Indian exporters were seeking 120 cents, but raised prices tracking a rally in New York futures, which were trading around 117.65 cents per lb at 0745 GMT -- after touching record highs.

"Cotton is not cheaper here. Domestic prices have also gone up. So exporters have to ask higher price considering domestic prices," said Paresh Valia, an exporter based in Bhavnagar district in western Gujarat state. He added that exporters were asking as much as $1.35 per lb.

Ends --

Reuters - for Commodities Now