China will harvest its smallest cotton crop – 26 million bales – since 2003/04 as it tries to whittle down a stockpile equal to two years of consumption, says the Cotton and Wool Outlook. The government has reduced incentives for farmers to grow the fiber and it is expected to reduce imports this year. The smaller crop in China is part of a worldwide retrenchment in the face of low prices and burdensome stockpiles. China holds roughly 60 percent of the global supply. “As a result, China’s policies to dispose of these stocks will continue to influence the market,” says the USDA. The global stocks-to-use ratio mushroomed by 50 percentage points over five years after China began building mammoth reserves.
As China reduces its cotton crop, India is vaulting into the lead as the world’s largest producer, forecast for 29 million bales, or 27 percent of the global crop. India, China and the United States are the three largest cotton growers in the world and together will grow nearly two-thirds of the crop worldwide. India displaced the United States as the No. 2 grower in 2006/07. Yields in Inida are well below the world average, but the country has vast amounts of land in cotton; its harvested area amounts to 38 percent of the world’s total.