It may take three or four years for the US and world markets to work themselves out of the surplus cotton stocks they face. The cotton industry has to reverse the trend towards greater use of manmade fibers. When prices start to rally, if they rally too soon, the United States becomes uncompetitive. The cotton that is being held in India all of a sudden becomes competitive and cheaper and takes away the market share of United States. Meanwhile, as prices weaken, China continues to roll out its reserve stocks.

When the market realises the US has extra bales to sell, it doesn’t help if growers and merchants hold cotton. Access of Chinese mills to competitively priced cotton has been strangled. As a result, they have turned to spinning polyester. The cotton blend in China has gone down from 53 per cent five years ago to 39 per cent currently. The result is China’s cotton use is down nine million bales.

Adding to the blend problem in China is the fact that Chinese companies produce more than 70 per cent of the world’s polyester, and its polyester staple fiber plants are only operating at about 63 per cent of capacity. So Chinese mills have a strong incentive to buy and run synthetic fibers instead of cotton.