China’s cotton policy hits global production
The International Cotton Advisory Council has welcomed China’s decision to reduce the auction price of cotton, but has warned that the country’s stockpiling strategy has done a “lot of damage” to the industry.
Since the start of its reserve policy in 2011, mill consumption there has declined by 17%, from 9.6 million tons in 2010/11 to 7.9 million tons in 2013/14. In 2014/15, the decline in consumption in China is expected to slow, falling by 1% to 7.8 million tons.
However, the next three largest consumers, India, Pakistan and Turkey are all expected to see growth in their mill use in 2014/15.
World consumption in 2014/15 is expected to reach 24.3 million tons, an increase of 3% in comparison with the previous year.
While world mill use is expected to increase in 2014/15, world production is forecast to decline by 2% to 25.2 million tons. In 2014/15, India is expected to produce nearly 6.3 million tons, which is a decline of 2% due to the expectation that the monsoon weather will not be as favourable as in 2013/14.
Most of the decline in world production will occur in China, where production is expected to decline by 10% from 6.7 million tons in 2013/14 to 6 million tons in 2014/15. As the Chinese government has restricted its support for cotton to just the Xinjiang region, production from outside the region is expected to fall significantly.
World trade is expected to decline in 2014/15 to 8.2 million tons from 8.7 million tons forecast for 2013/14.
As with production, this decline stems mostly from China, where imports in 2014/15 are expected to be 2.2 million tons, down by 30% from 2013/14 and 60% from its peak of 5.3 million in 2011/12. However, China’s decline will be partially offset by imports from Bangladesh, Indonesia, and Vietnam, which are expected to import a total of 2.4 million tons in 2014/15, an increase of 13% from 2013/14.
