China: Cotton and Products Annual
Higher cotton prices in MY16/17 and continued government subsidies are expected to encourage cotton farmers to moderately expand cotton acreage in MY17/18. Planted area is forecast to increase 3.3 percent. Chinese cotton production is forecast to recover by two percent to 5.15 MMT, still the lowest level in a decade compared to official production statistics. Despite the comparatively small domestic production, China remains focused on reducing its state cotton reserves. Industry observers expect China may succeed in lowering reserves to five MMT by the end of 2008. Cotton use is expected to recover to 7.9 MMT in MY16/17, and forecast to rise to eight MMT in MY17/18. The narrowing gap between domestic and global cotton prices contributed to this recovery and also resulted in lower yarn imports. MY17/18 ending stocks are forecast to fall to 8.9 MMT with stocks to use ratio down to 111 percent. Anticipating Chinese sales of cotton reserves and restrictions on additional import quotas, China’s cotton imports are expected to drop further to 0.98 MMT in MY16/17, the second lowest level in 13 years. Still, the Chinese textile industry continues to use higher-grade foreign cotton to stay competitive in export markets. MY17/18 total cotton imports are forecast at one MMT.
