China’s cotton market is set to close at a two-year low. A strong dollar and weak demand have hit trade. The country’s persistence with Covid Zero is hurting consumption and disrupting supply, and soaring global inflation has sappedthe demand for cotton products.

China is the world’s biggest consumer and importer of cotton and the top exporter of apparel and textiles. It produces about three-quarters of the cotton it needs for processing and imports the rest, mainly from the US, though annual imports through September have fallen about a fifth from last year.

The battle to contain a jump in virus cases is putting renewed pressure on China’s economy. More and more places are becoming subject to curbs. Demand for clothing is weakening as people stay at home and spend less, shrinking operating rates at textile mills, which in turn are buying less of their raw material.On the supply side, lockdowns in the northwestern region of Xinjiang, the source of almost all of China’s crop, has slowed the purchase and transport of the commodity, again forcing manufacturers to cut production. The amount of cotton processed in China is almost 50 per cent below last year’s levels. Expectations of a bumper domestic crop this autumn are adding to the pressure.