China’s cotton imports fell 62.3 per cent in July from a year ago. Imports by China, the world’s top cotton consumer, are already down by 33 per cent this year after the government issued fewer quotas in a bid to boost demand for the domestic fiber.

China holds an estimated 11 million tons of cotton in state reserves, around half of the world’s stocks, after it bought up more than 80 per cent of the domestic crop between 2011 and 2013 to support growers. It is currently auctioning some of the fiber to mills at daily sales but has only managed to sell 3.7 per cent of the volume offered to date.

Beijing's surprise devaluation of the yuan last week, which pushed the currency to its lowest against the dollar in almost three years, is not seen as having a major impact on imports. Even if it does make imported cotton a bit less attractive, it also makes imported yarn less attractive.

With restricted volumes of import quotas for cotton, China’s textile mills have turned to importing yarn instead. Yarn imports are up 20 per cent in the first six months of the year. Imports for the 2015-16 crop year beginning in October are expected to fall to 1.3 million tons, down from 1.8 million tons in the current year.