China’s production of extra-long staple (ELS) cotton could be three times last year's crop in 2015-16. Output could be as much as 1,80,000 tons, triple of last year's 60,000 tons. ELS cotton or pima cotton is top quality cotton and makes up a tiny portion of total cotton consumption. It is mainly used by luxury shirt brands and in high end bed sheets. Chinese mills consume most of the fiber but local output declined under a government stockpiling policy that paid generous prices to farmers for regular cotton and offered no incentive to growers of higher quality ELS.

ELS premium over regular cotton has risen significantly in recent years after drought and competing crops in California reduced production in the world’s top exporter. After China abandoned stockpiling last year, and offered new subsidies connected to market prices, farmers began to plant significantly more ELS. China’s subsidy for the fiber is 1.3 times the regular cotton subsidy.

A smaller US crop will do little to support prices, given China’s surge in output. Chinese traders are not interested in US imports, since they have expectations of lower Chinese prices. However, China will buy some US pima for certain types of yarn.