MUMBAI (Commoditiescontrol) - China’s MY17-18 (Aug-Sept) Cotton Production is expected to recover to 5.4 million metric tonnes (MMT), up 9 percent from an estimated 4.95 MMT in MY16-17, according to FAS USDA report.
The forecast recovery is based on a 5.9 percent expansion in planted area to 3.12 MHa, and on higher yield. Increase in cotton prices and profits during MY16-17, and the government’s continued subsidies to Xinjiang province contributed to the cotton area expansion, while favorable weather conditions contributed to higher yield in MY17-18.
FAS forecast for China’s cotton stocks remain high at 8.73 MMT by the end of MY17-18. However, this level is significantly lower than the 10.5 MMT at the end of MY16-17. Increased use of state reserves and the moderate recovery in cotton consumption accounted for the reduction in stocks. In addition, expected limited cotton imports, as a direct result of restrictions on additional import quotas, will also contribute to ending stocks falling in MY17-18.
Cotton imports for MY 17-18 are forecast to recover to 1.3 MMT from MY16-17 at 1.09 MMT based on a forecast recovery in high-grade cotton consumption and a decline in yarn imports in 2018. The Chinese textile industry’s demand for higher-grade cotton is primarily satisfied by imports.
However, the government’s restriction on additional quota imports, subject to a sliding duty and outside the tariff rate quota amount committed under the World Trade Organization (WTO), have tempered the prospects for any significant increases in cotton imports. The WTO quota allows a yearly volume of 894,000 tons subject to a one percent import tariff. The Chinese government has suspended the distribution of additional quotas since 2016.
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(By Commoditiescontrol Bureau; +91-22-40015533)
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