WASHINGTON — November 1, 2015 — Last month, China announced that its 2016 cotton import quota would be limited to 894,000 tons, the same as in 2015, in order to encourage consumption of domestically produced cotton. Cotton production in China is estimated at 5.4 million tons in 2015-16 and the Chinese government still holds around 11 million tons in its reserves. The total supply of cotton in China for 2015-16, excluding imports, is estimated at 18 million tons, which would be more than double its annual volume of consumption, forecast at 7.7 million tons.
However, demand for high quality cotton will be partially met by imports, particularly given concerns over the quality of this year’s domestic crop. Chinese imports are projected to fall by 24 percent, to less than 1.4 million tons. China will likely remain the world’s largest importer in 2015-16, but its share of world imports has fallen from 55 percent in 2011-12 to 22% in 2014-15 and may only reach 17 percent in 2015-16. Instead, imports to other Asian countries are taking on a larger share and will partially offset the decline. In 2011-12, imports by the rest of Asia accounted for 31 percent of world imports. In 2015-16, Asian imports excluding China are expected to reach 4.5 million tons, representing 60 percent of world imports. Bangladesh, Vietnam and Indonesia are the three largest importers in the region outside of China. Imports by Bangladesh may slightly exceed one million tons in 2015-16, up 4 percent from last season, while imports by Vietnam are projected up 5 percent to 990,000 tons. After declining in 2013-14, imports by Indonesia increased 13 percent to 735,000 tons in 2014-15 and may reach 780,000 tons in 2015-16. Mill use in Asia outside of China is forecast to rise by 4 percent to 12 million tons, representing 48 percent of world consumption projected at 25 million tons in 2015-16. Mill use in India is expected to reach 5.6 million tons, up 3 percent from 2014-15 and in Pakistan, 2.6 million tons, up 2 percent from 2014-15.
The cotton trade remains competitive as China’s cotton policy evolves and cotton-exporting countries continue to seek new markets. However, world production is forecast down 9 percent to 23.9 million tons, about 1.1 million tons below consumption. Although production in the United States is projected down by 11 percent to 3.2 million tons and exports down by 9 percent to 2.2 million tons, it will likely remain the world’s largest exporter.
India, the world’s second largest exporter, could see a small recovery in 2015-16, with exports forecast to increase 15 percent to 1.1 million tons. Exports from Francophone Africa are anticipated to reach 1.1 million tons in 2015-16. Production in Francophone Africa has steadily grown from 494,000 tons in 2010-11 to 1.1 million tons in 2014-15 and 2015-16. As production has grown in this region, its share of world exports, which used be 6 percent in 2010/11, is expected to rise to around 14 percent in 2015/16.
After reaching 12.7 million tons in 2014-15, ending stocks in China may decrease by 8 percent in 2015-16 to 11.7 million tons while stocks outside of China are forecast to fall by 2 percent to 9 million tons.
World Cotton Supply And Distribution
|Changes from previous month|
|Million tons||Million tons|
|Cotlook A Index||91||71||73*|
* The price projection for 2015/16 is based on the ending stocks/consumption ratio in the world-less-China in 2013/14 (estimate), in 2014/15 (estimate) and in 2015/16 (projection), on the ratio of Chinese net imports to world imports in 2014/15 (estimate) and 2015/16 (projection). The price projection is the mid-point of the 95% confidence interval: 62 cts/lb to 86 cts/lb.
Posted November 3, 2015