The United States, the world's largest exporter of cotton, will end export subsidies on cotton in 2006. It would induce rise in prices to almost 15 percent and decline margins, aprehends a leading textile manufacturer.

Fountain Set, a Hong Kong-listed knitted fabric maker, told analysts that its net profit margin had dipped from 7.8 percent a year earlier, to 4.6 percent in the company's first half ended February 2004.

This was because from September to October 2003 the prices had gone up to 43 percent.

Compared with country's domestic subsidies of $3.7 billion, the subsidy on cotton exports paid by the US government, was $350 million (HK $2.73 billion) in 2004.

The US average cotton price was 54.42 US cents on December 16. It marginally climbed to 55.14 cents per pound on Tuesday.
The US Department of Agriculture claims that average spot price of cotton have gone up 15 percent, this year.

Meanwhile, Hong Kong Textile Council Vice Chairman Willy Lin in a statement said that cotton prices are not easy to predict as the pricing depends on several factors.