China: Cotton and Products Annual
Expecting lower farmer earnings as a result of the implementation of new cotton policies since MY14/15, cotton acreage is forecast to shrink once again by 9 percent, to its lowest level in twelve years. Correspondingly, cotton production is forecast to fall further to 4.9 million tons (MMT) in MY16/17. Despite declining production, China has not been able to ease its large cotton stocks built during three years of state cotton purchases. MY15/16 ending cotton stocks are estimated at 13.8 MMT and still account for 61 percent of the world’s total. The economic slowdown and robust imports of yarn continue to temper the recovery of China’s cotton use for MY16/17 estimated at 7.3 MMT, up slightly from MY15/16. Anticipating China’s continued sales of cotton reserves and restrictions on additional import quotas in MY15/16, China’s cotton imports are also expected to hit 1.1 MMT, the lowest level in 13 years. China’s imports of U.S. cotton are also expected to fall. However, the Chinese textile industry will continue to seek higher grade foreign cotton to stay competitive in export markets. This supports a slight recovery in imports for MY16/17 forecast at 1.2 MMT.
