China's Long Staple Cotton (LS) on the Rise

Two years ago, Globecot conducted an extensive study of China’s extra long staple (ELS) cotton production base in Xinjiang. The study originated from a Globecot forecast correctly identifying a global surplus of ELS—mainly because of China—and a subsequent plummet in ELS prices. In 2006, China produced a record 178,000 tons of ELS. In 2007, the tonnage had dropped to 153,000 tons and this past year total output was less than 90,000 tons. Heavy stocks and low prices have kept local farmers and the Production Construction Corporation from planting more ELS. For the coming marketing year, ELS acreage intentions are expected to be considerably lower. A waning interest in ELS production has coincided with an increasing interest in planting more long staple (LS) cotton, something we correctly identified in the original survey. In fact, LS production has risen from 50,000 tons in 2006 to an estimated 85,000 tons in 2008. In the previous survey, we identified LS production mainly in the northern part of the province—in and around Shihezi and Kuytun. At the time, we mentioned the very important PCC#3 in Kashi was also planting a trial run of LS. It was a success because the PCC#3 in 2008 didn’t plant one acre of ELS. The question remains how will this battle for acreage between LS and ELS in the coming years pan out.

We are contemplating a new study, incorporating a closer look at the LS production phenomenon in Xinjiang, but we will also include an updated version of the original ELS report--two for the price of one. In addition, included in the new study would be a special section reporting what 20 major vertical textile mills in China think about both LS and ELS cotton. A new prospectus will be distributed in the next few weeks so please stay tuned for announcements on the http://www.globecotnews.com/ website.

I have prepared the following short sample from the original study. To download the sample, simply click here.