The cotton growing area in China is expected to fall 9.4 per cent from the previous year.Due to rising cost and falling profitability of cotton growing and the government’s abolition of its temporary purchasing policy to hold up prices, the cotton growing area in the Yangtze River basin and the Yellow River basin has dropped by a relatively big margin.
Current Chinese cotton stocks are abnormally high, and to reduce these and return to normal levels, China would have to produce less, consume more, or reduce net imports or some combination.
China’s cotton stocks-to-use ratio surged to a record level of 180 percent in 2013-2014. As Chinese textile industry is recovering from its decline in 2013, the demand for cotton is expected to increase by half a million tons from the previous year to 8.5 million tons.
India, another major cotton exporter, is also expected to export only 5.7 million bales in 2014-2015, due to weaker global import demand. In the present scenario, it will be a daunting task for China to implement policies to reduce its cotton stocks, and hence the excess stocks are likely to remain for a while.
Cotton demand in China is expected to exceed its domestic supply by two million tons from September 2014 to August 2015.
