China will not increase imports of raw cotton in the crop year 2016-17.

This will increase the share of cotton available in the open market for other importing countries like Bangladesh, Vietnam and Turkey.

Though the Chinese crop is expected to be only 21 million bales and is a historic low, it will be offset by the sale of reserve cotton from March 2017. Since the harvest easily exceeds this demand, it could be expected that supply-related price pressure will ease as more of the crop is harvested and made available to mills.

In the absence of enhanced Chinese imports, and in the wake of the current scenario where Australia has reached a bumper harvest of four million bales of cotton, the scenario would be ideal for countries importing raw cotton. It will also be a good time for importers to bargain hard over the pricing of the fiber.

However raw cotton imports by India and Pakistan are expected to drop in the wake of better crop yields this year. In Pakistan alone 1.3 million more bales of cotton are expected this year. India too is having a bumper crop with an increase of 1, 00,000 bales compared to the previous year.