China the world's second biggest cotton grower will probably have lower output than expected. Its estimated 2014-15 production is 6.51 million tons, down 4.3 per cent from its August forecast and 6.9 per cent less than last year. Early in the growing season, farmers were plagued with dry conditions that stunted plant growth. That was followed by a period of unusually heavy rains in September, which hurt crop quality along the Yellow River Basin. A smaller domestic crop means the country, the top consumer, may buy more from overseas, helping to erode global inventories that have swelled to a record.

So China may import more cotton than is currently estimated. However, China has so much cotton inventory waiting to be sold that the output reduction almost doesn’t matter. Prices slumped 29 per cent this year as global production is set to exceed demand for the fifth straight year.

After China’s stockpiles swelled to an all-time high, the government scrapped policies aimed at building inventories and instead is offering a subsidy to farmers if prices fall below a pre-set target. The country is one of the main buyers of fiber from the US, the biggest exporter. India is the largest cotton producer in the world.