China’s cotton imports continue to plummet. Its policies encourage textile manufacturers to use domestic supplies and low oil prices have driven increased use of synthetics. The country’s cotton imports are down 40 per cent from 2014. Imports could drop another 40 per cent in 2016.

China has built a large stockpile of cotton estimated at 11 million tons. China terminated the floor price policy on cotton in 2014 that paid farmers above market prices. Cotton prices became more market oriented as the price gap between domestic cotton and imported cotton sharply decreased.

Low crude oil prices recently had pushed down synthetic fiber prices and made it more competitive than cotton. China imported 4.15 million tons of cotton in 2013, but that dropped to 2.44 million tons the next year before falling to its current low level. Of the 894,000-ton quota China’s required to make available to textile companies, only 33 per cent goes to state-owned companies. But if the government does dump its reserve on the market, pushing prices below that of imported cotton, China could import close to, or even less than, the 894,000-ton quota of cotton in 2016. Import quotas were not so high last year as in previous years.