China is likely to restrict cotton imports to the minimum required under world trade rules for the second year in a row as it tries to work down a massive surplus of the fiber, says the International Cotton Advisory Committee. Beijing holds slightly more than half of the world’s surplus, estimated at 22 million tonnes for the 2014/15 trade year. “Given the large volume of stocks within China, it will likely maintain the restricted import volumes through 2016, and China’s imports could fall 10 percent to 1.6 million tonnes (7.3 million bales) in 2015/16,” said ICAC.
The world cotton “carry-over” has risen for four years in a row and is expected to equal 90 percent of annual use as the 2015/16 trade year begins. ICAC said production is forecast to fall by 9 percent in 2015/16, with all of the five major cotton countries cutting output. “Rising costs of production and a decreased subsidy in China are likely to lead to a 16-percent drop in production to 5.4 million tonnes (24.8 million) bales” said ICAC. A 2-percent cut was forecast for India, the world’s largest grower, resulting in a crop of 6.4 million tonnes (29.4 million bales).
The USDA has projected a drop in U.S. cotton production of 11 percent this year as plantings and yields decline in the face of low market prices. It will make its first forecast of the harvest on Aug. 12.