Global cotton prices dipped in late June after the Cotlook A Index rose to 96.65 cents per pound in the middle of June before receding to the low of 90 cents level towards the end of the month; as the global cotton policy remained China centric, International Cotton Advisory Committee (ICAC) said in a statement on monthly cotton scenario.

The ICAC said that on June 12, the USDA increased 2012-13 export estimate to three million tons due to continued strong sales to China, and lowered the estimate of 2013-14 US production to 2.9 million tons due to drought in the southwest. The Cotlook A Index rose 2.90 cents per pound the following day.

A week later, the Federal Reserve’s signal that it could start scaling back its huge economic stimulus programme later this year triggered only a modest drop of 1.75 cents per pound in the Cotlook A Index.

China’s national cotton reserve is estimated near nine million tons as of end of June and the reserve may went down to eight million tons by the end of July. Purchases in the reserve will resume in September as the 2013-14 harvest begins.

In May, the International Monetary Fund (IMF) lowered its forecast for China’s growth to 7.75 percent this year. The new administration in China has initiated a series of reforms designed to open up the economy to private investment and speed up urbanization, which will likely to accelerate reduction in the cotton area.

In June, the People’s Bank of China said that the government is willing to tighten the monetary policy to achieve more stable economic growth.