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US cotton builds bridges with Chinese mills

If the ongoing trade war is not resolved soon, mills in China could move away from US cotton permanently and toward Brazilian or West African cotton. The US cotton industry enjoyed a 46 per cent share of all imports going into China. But that changed when China issued a 25 per cent tariff on US cotton in retaliation for tariffs placed on Chinese goods by the US.

China accounts for one-third of total global mill use for cotton. For the 2018-2019 marketing year, China may increase its imports by at least seven million bales or higher to meet its mill needs and were it not for the tariffs, the US could have been in a strong position to cater to the demand. However, China is still seen as a key market for US cotton and the US will promote the benefits of its cotton. Chinese mills like US cotton for its quality, its consistency and its low contamination. China is the US’ most efficient market to ship to in the world so it keeps costs down.

China produced roughly 26 million bales last year, leaving a gap of 15 million bales where it turned to imports and stocks to meet the shortfall.

 
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