China’s cotton stocks have drastically fallen, from 60 million bales in 2014 to just under 13 million bales. This dramatic reduction has been due to three years of aggressive selling with 11.5 million bales sold in the latest annual round of selling which ended in September. China was able to increase reserves dramatically as additional imports were allowed to offset purchases from the domestic crop.

In 2015-16, China’s shift away from a price support program for cotton caused internal prices to fall, which helped to boost consumption but also helped to lower production. The gap between the two grew to nearly 15 million bales. From 2012 to 2015, the gap between cotton consumption and production in China was less than five million bales.

At the same time, China stopped issuing additional TRQ (Tariff Rate Quota) import licenses under its sliding-scale quota category. The belief is that the country wishes to maintain around 11.5 million bales. World cotton production for 2019 is forecast to be down, led by Pakistan, China, and India more than offsetting higher production in Brazil.

Trade is projected up with higher Brazil exports and rising Pakistan demand. Global use is down sharply mainly because of China’s lower-than-expected annual growth amid uncertain economic prospects and textile exports.