China: Cotton and Products Update
Higher cotton prices in MY16/17 and continued government support to cotton production stimulated the recovery of Chinese cotton planted area in MY17/18, up 5.9 percent to 3.12 million hectares (MHa), over the previous year. In light of expected good yield, MY17/18 cotton production is forecast to grow 7.1 percent to 5.36 MMT. Cotton use is also expected to recover in MY17/18 to 8.38 MMT mainly due to the narrowing gap between domestic and global cotton prices. Increased cotton utilization is expected to reduce yarn imports. Correspondingly, MY17/18 ending stocks are forecast to decline to 8.64 MMT with stocks to use ratio down to 103 percent. The Chinese textile industry is still eager to use higher-grade foreign cotton to stay globally competitive. However, the expected sales of Chinese cotton reserves and the current restrictions on additional import quotas are unlikely to allow significant increases in imports. Hence, China’s cotton imports are expected to remain stagnant in MY17/18 at 1.09 MMT.
