Troubled Australian cotton dealer Namoi Cotton has agreed to enter into a joint venture with the China National Cotton Group (CNCG), aimed at reducing its exposure to market volatility.

The 50:50 marketing joint venture would apply to the 2012 to 2017 cotton seasons, but would leave Namoi to pursue the procurement of Australian bale cotton.

Announcing the deal to the Australian Stock Exchange, Namoi, the country’s largest cotton ginning company, said it was not expected to have an impact on the way it currently conducts its business.

The joint venture was, it said, “the most efficient and effective” means of delivering greater value to its stakeholders.

Namoi has an estimated 30% market share of Australian cotton ginning, but reported heavy losses earlier this year on cotton futures.