China: Cotton and Products Update
Post’s MY14/15 forecast for cotton production remains unchanged from the previous 6.5 million tons. Recently released details suggest that the government’s new cotton support policy will lead to a more market-friendly cotton price compared to the artificially-high cotton price resulting from previous floorsetting policies. However, the new policy lowered profit expectations for cotton farmers in the Yellow River and Yangtze River regions and tempered a small expansion in the Xinjiang cotton planted area. Despite a moderate recovery in domestic cotton consumption to 8.35 million tons, the government’s decision to restrict cotton import quotas will significantly reduce cotton imports to about 1.52 million tons in MY14/15. As a result, U.S. cotton exports to China will continue to fall in MY14/15.
