Cotton market share of China decreases but rest of Asia provides compensation

Cotton market share of China decreases but rest of Asia provides compensation

According to ICAC, the International Cotton Advisory Committee China’s cotton situation is changing. 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%, 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% in 2011/12 to 22% in 2014/15 and may only reach 17% 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% of world imports. In 2015/16, Asian imports excluding China are expected to reach 4.5 million tons, representing 60% 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% from last season, while imports by Vietnam are projected up 5% to 990,000 tons. After declining in 2013/14, imports by Indonesia increased 13% 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% to 12 million tons, representing 48% 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% from 2014/15 and in Pakistan, 2.6 million tons, up 2% 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% to 23.9 million tons, about 1.1 million tons below consumption. Although production in the United States is projected down by 11% to 3.2 million tons and exports down by 9% 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% 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% in 2010/11, is expected to rise to around 14% in 2015/16. After reaching 12.7 million tons in 2014/15, ending stocks in China may decrease by 8% in 2015/16 to 11.7 million tons while stocks outside of China are forecast to fall by 2% to 9 million tons.

ICAC-1

www.icac.org


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