In addition, the government had decided not to adjust the state purchase price this year.

Cotton output was expected to fall from the 4.3 million tonnes harvested last year, said an official of the All-China Association of Supply and Marketing Cooperatives.

The official declined to give detailed figures.

State media have reported cotton output would drop by 600,000 tonnes this year because bad weather had delayed the normal maturity of cotton. Reports have said weeks of flooding had hit nearly 666,000 hectares of farmland under cotton.

Acreage under cotton was estimated at 4.43 million hectares this year, down 133,333 hectares from last year, the People's Daily said on Monday.

Of that, some 233,333 hectares was reported to have failed due to the floods, the newspaper said, quoting figures from a national conference on cottonproduction that concluded on Sunday.

However, cotton supply would still outstrip demand due to high stockpiles and a slump in the domestic textile industry, the newspaper said.

China's cotton stockpiles hit about 2.5 million tonnes at the end of May this year, state media have said.

High purchasing prices set by the state have prompted more farmers to plant cotton.

The government had decided not to cut state purchase prices further in 1998 to protect the interests of cotton growers, the association official said.

In April, China ordered cuts in state buying prices to bring cotton prices in line with international prices and to encourage textile firms to use domestic cotton.

The price for cotton from China's premier growing region, Xinjiang, was lowered to 12,000 yuan per tonne from 12,600 yuan per tonne. The price of cotton from other regions was cut to 13,000 yuan per tonne from 14,000 yuan per tonne.

Moreover, authorities started allowing the buying price to fluctuate within five percent ofthe official level.

The national cotton working conference ordered all state cotton firms to purchase all surplus cotton from farmers, the People's Daily said.

It also ordered local cotton firms to stop selling cotton to textile enterprises on credit instead of for cash, it said.

State cotton firms were not allowed to give farmers IOUs instead of cash, it said.

State-run supply and marketing cooperatives would retain their status as the country's sole authorised cotton purchasers, processors and dealers, the Xinhua News Agency said.