Seven official sectors related to the cotton market, including the influential National Development and Reform Commission (NDRC) and the Ministry of Agriculture (MOA), have jointly published a notice this week requesting their regional branches to take measures to stabilize the cotton market, Liverpool-based Cotlook Ltd. reports in its November 5 issue of Cotton Outlook (subscription required).
Cotlook says the notice identifies areas of concern, including a perceived relaxation of quality management and the influence of speculative activities on prices.
The recommended measures include the following: strengthened market supervision (cracking down on illegal purchasing without license, for instance), increased quality controls, quicker railway deliveries of Xinjiang cotton, increased financial credit management and strengthened information services and market guidance.
Although the notice does not provide new, specific steps, it underlines the depth of concern in official circles. What detailed measures the government will take in the coming weeks remains a matter of conjecture, Cotlook said.
Questions: Do the recommended measures provide a reasonable opportunity to stabilize cotton prices? Why or why not?
What other steps could be taken to accomplish the goal?
Is there a threat to the broader economic stability of the country over the longer term if an attempt is not made at market stabilization?