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China keeps cotton imports low

Chinese cotton imports are unlikely to rise this season. Instead the country will continue to draw down cotton stocks. The priority is to ease the burden of its large cotton stocks following years of cotton purchases. China may succeed in reducing its cotton reserves to five million tons by the end of 2018. This can be compared to the 13.9 million tons in 2014-15 when China's cotton reserves peaked after three years of support purchase programs.

These cotton sales will keep a lid on imports, despite the steady consumption. However, seeking to stay competitive in export markets, the Chinese textile industry is likely to continue sourcing higher grade cotton from the United States.

Plantings are being supported by a price subsidy policy in Xinjiang, the country’s top growing region. Similarly, the reduction of government support to corn production in 2016 is expected to encourage farmers to add cotton acreage moderately in other cotton-producing provinces. China’s 2017-18 cotton production is forecast to be 5.15 million tons.

China’s cotton imports declined 39.1 per cent in 2016. The country is drawing down the huge stocks accumulated through a price support mechanism. China is importing only half as much cotton as it was two years ago and less than a quarter of the amount it was importing four years ago.