According to the US Department of Agriculture (USDA) in its first formal forecasts for next season, Cotton demand in China, the top consumer of the fiber, will grow in 2016-17 by 1m bales to 33.0 million bales. This predicted increase would be the first since 2009-10, when it reached a record 50.0 million bales, before China's policy of providing guaranteed and elevated values for growers, in keeping domestic prices far above international ones, rendered its mills uncompetitive.

Consumption increase will be spurred by a willingness by China to accept lower bids for cotton stockpiled during its programme of guaranteed prices, after auctions last year failed to attract significant buying. The prospect of extra supplies hitting the market bode ill for prices, which will average 67 cents a pound next season, as measured by the Cotlook A index of physical values, 2 cents below the average price expected for 2015-16.

According to USDA, ‘weak’ world demand growth, and low prices of man-made fibers such as polyester, besides ‘the pressure of China's surplus disposal policies,’ are reasons for undermining cotton price prospects.