China cotton imports in 2019/20 are expected to surpass the previous year’s robust level, reinforcing its position
as the world’s largest importer. The current 2018/19 estimate, boosted this month, is expected to be the largest in 5 years as China supplements domestic supplies amid ongoing auctions of State Reserve stocks. Despite this strong upward trend in imports, U.S. exports to China have weakened as Brazil, Australia, and other countries have expanded both exports and market share.
The additional 25-percent tariff on U.S. cotton (implemented July 2018) has curtailed its historically dominant position as China’s leading supplier, with estimates suggesting these duties add RMB 4,000 ($600)/ton (see China’s 2019 Annual Report here). Moreover, record 2018/19 exportable supplies from Brazil have improved its competitiveness relative to U.S. cotton, while Australia’s proximity and large carryin supplies have supported recent strong shipments. Despite increased competition and tariffs, 1.3 million bales of U.S. cotton were imported by China from August to May. Although U.S. 2019/20 global exports are expected to grow from the previous year, shipments to China may be impeded amidst projected record 2019/20 exportable supplies from Brazil and because of current trade policies.
For 2019/20, the forecast shows lower world consumption, primarily in Bangladesh and China. Bangladesh imports are also down, pulling global trade lower this month. Total ending stocks are higher on larger supplies in India and China. The U.S. forecast is mostly unchanged from last month with slightly higher ending stocks, and the U.S. season-average farm price is projected at 63 cents per pound, down 1 cent.
For 2018/19, world production is forecast up slightly, mostly in India. Trade is estimated lower with subdued demand in Bangladesh along with less exports from Australia. Slower Australia exports has helped raise global stocks this month, along with less use in China. Higher stocks also portray the U.S. balance sheet, as exports and consumption are both lowered. The U.S. season-average farm price is unchanged at 70 cents/lbs.
For current prices received by farmers click here; NASS farm price
The A-index and the U.S. spot prices were mostly unchanged in June amid uncertain market conditions.