A Rising China Floats All Boats

The theme of this year’s China International Cotton Conference was “Meeting the Financial Crisis and Pursuing Sustainable Development for the Chinese and Global Cotton Industries.” The Conference was held in mid-June in the historic city of Nanjing, founded in 229 AD. There is extensive coverage in the July/August issue of Cotton International Magazine that went to press earlier this week.

Li Chengyu, President of the China Cotton Association, began the opening session by saying that out of disasters come opportunities for his country. He ended with two Chinese sayings: “As long as green hills remain, there will never be a shortage of firewood,” and, “the fire burns high when everybody adds wood to it.”
The point being that as long as a united Chinese cotton industry makes a concerted effort, China will reach its goals.

The word for quite a while has been that China’s economy is recovering from a world-wide recession faster than other developed countries.

Li Chengyu’s words are proving prophetic. Wednesday, according to a report by Bloomberg, China’s stocks rose enough to drive the Shanghai Composite Index to a 13-month high as banks and developers showed optimism.

A strong Chinese economy will pull cotton demand right along with it. For example, ICE December 2010 futures rose to nearly 72 cents per pound until an over-bought correction took it back to around 68 cents. Still, that’s 14 cents per pound higher than it was in March – a 26 percent gain.

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Despite the fact that the U.S. deficit is approaching $1 trillion and a Dow Jones Industrial Average that lost nearly half its value before bouncing back to its highest point since January on Thursday, cotton traders remain somewhat bullish. Why the that sentiment? One word: China.

They used to say, “a rising tide floats all boats.” As for cotton, you may as well change that to “a rising China floats all boats.”

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