Mills in China will be allowed to enhance their cotton imports.
China, once the world’s top cotton importer, saw imports shrink from more than five million tons in 2011-12 to around a million tons last year, due to its efforts to reduce state stockpiles of the fiber.

Now, after several years of auctions to lower state stocks and with demand recovering, the market has become concerned about supplies.

China’s domestic cotton futures have rallied nearly 18 per cent since early April, fueled in part by worries over crop damage from heavy rains, as well as by heavy speculation.

It’s possible China’s move is related to pressure from the United States for higher imports of American farm goods.

Despite the move to boost imports, China says supplies are basically sufficient and that abnormal fluctuations in the current market are influenced by speculation and other factors.

China’s cotton output this year is expected to remain stable, with weather disasters about the same as in previous years. Bad weather came relatively early as well, reducing any impact on yield.

Commercial inventories are about 2.87 million tons at end-April, about a million tons higher than the same time last year.

While cotton demand has been steadily rising this year, there is limited room for growth.