China’s Weiqiao Textile Company has warned of a significant decrease in profit for 2014, blaming the “drastic” fall in China’s domestic cotton prices.

The company said the price falls in the 2014 crop year had come as a result of the cancellation of the Chinese government’s national cotton temporary reserve policy, and the implementation of the detailed full scale of direct subsidy policy in September.

As a result, Weiqiao said, its downstream customers had adopted a cautious approach to purchasing, negatively impacting market demand, as well as the group’s sales volumes and selling prices.