Chinese cotton imports in February fell 65 per cent compared to the same time last year. Cotton demand from China is slumping, thanks to heavy inventories and sluggish economic activity. In fact, China is expected to be overtaken by Bangladesh as the world’s top cotton importer in 2015-16.

Chinese cotton demand in the year to July 2016 is expected to fall to the lowest in twelve years. China is believed to have accumulated as much as 11million tons of cotton as part of a price support scheme. The country is now planning to release these supplies back on the market, but at what price, and at what speed, remains to be seen.

Pressured by sluggish global demand, cotton futures had a terrible start to the year. By late February, prices in New York were down 15 per cent from the start of the year. Chinese imports remain the key to the price outlook. Since the global inventory reduction in 2016-17 is due solely to China, the upside price potential in New York will probably remain limited for as long as China's imports do not pick up again and worldwide demand essentially stagnates.

Prices are still down about 10 per cent since the start of the year.