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China Sourcing Update: Prices of Natural Textile Materials (Jun 2017)

  1. Cotton price indices prices rise and then fall in June

The price indices of cotton stayed relatively stable in early June and then picked up in mid-June, but have dropped since then. The CC Index 3128B, for example, hovered around 16,070 in early June and rose to a nearly four-year high of 16,083 on 12 June, before falling to 15,939 on 30 June (see exhibit 1). Cotton prices fluctuated around high levels in early June as the restocking demand from textile manufacturers was strong. After peaking in mid-June, the spot prices of cotton dropped as the prices of cotton futures in China fell and some textile manufacturers postponed their purchases of cotton until 1 July, when the value added tax on cotton was reduced from 13% to 11%. Looking ahead, we expect domestic cotton prices to trend downward in the near term, as market expectations of an increased global supply of cotton in the coming months have dragged down the prices of cotton futures in China as well as the international markets in recent weeks.

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Content provided by Fung Business Intelligence
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