The International Cotton Advisory Committee nudged lower its forecast for cotton prices as it warned that China’s imports would fall even further than thought, to their lowest in at least a decade.
The intergovernmental group slashed to “less than” 1.4m tonnes, from 1.6m tonnes, its forecast for China’s cotton imports in 2015-16, doubling to 24% its forecast for the pace of decline.
The downgrade, to the lowest figure on records going back to 2006-07, means that China, while “likely” remaining the world’s top cotton importer in the season, which started in August, it may see its share of global buy-ins drop to 17%.
That compares with 22% last season, and the 55% share of world imports it had in 2011-12.
The downgrade comes as the cotton industry is getting to grips with the knock-on effects of a reform of China’s subsidy policy, which until last year guaranteed farmers prices which were well above international market rates.
That led to a ramp-up in state inventories to a level which the ICAC says is “still around 11m tonnes”, as farmers sold into the government programme, while the fibre and textiles industry prioritised cheaper imported cotton, or turned to foreign yarn, over which there are less stringent import restrictions.
China’s cotton imports in September fell to 50,948 tonnes, a drop of 59% year on year, and the lowest figure on data going back to 2005, in what was taken as a sign of some success in China diverting demand back to domestic supplies.
However, the ICAC flagged that specification factors would support the need for significant imports this season nonetheless, noting “concerns over the quality of this year’s domestic crop”.
(Source – http://www.agrimoney.com/news/icac-trims-cotton-price-hopes-as-china-import-forecast-cut–8965.html)