China has cancelled purchases of US cotton. This is the largest purchase cancellation in a decade in fresh signs of demand headwinds for the world’s biggest exporter. China nixed 1,44,400 bales of purchases for the week ended December 15, 2022. This has been the biggest weekly cancellation since June 2012. It pulled down overall American sales.

China’s demand has slowed due to Covid lockdowns and a contraction in manufacturing. The Asian nation is the world’s biggest importer of the fiber and the biggest US customer.Cotton futures tumbled as much as 4.5 per cent on ICE Futures US, on pace for the biggest loss since November 21. The price has plunged more than 45 per cent since reaching a decade high in May amid mounting demand worries.

International sanctions against cotton produced in the region of Xinjiang, by far China’s largest producing province, are also keeping more of the fiber at home, reducing Chinese imports of yarn.China’s cotton consumption in the 2022/2023 crop year that began in September 2022 was 7.5 million tons, 2,00,000 tons lower than the forecast. Growing enthusiasm by farmers to sell corn ahead of next month’s Lunar New Year holiday as well as easing Covid restrictions on movement have boosted supply of the grain, pressuring the market.