- USDA's foreign unit forecasts 31% plunge in shipments
- Estimate is `bearish' for price outlook, Love Consulting says
Chinese cotton imports will fall to their lowest in 13 years, according to a U.S. government forecast, as the nation reduces its inventories amid declining domestic use and growing competition from foreign producers.
Chinese mills will bring in 5.75 million bales from overseas suppliers in the 12 months started Aug. 1, the U.S. Department of Agriculture’s Foreign Agricultural Service said Tuesday in a report posted on its website. That’s 31 percent lower than a year earlier and the least since 2002-2003.
Total Chinese production will also be down, according to the U.S. estimates. Output is projected at 25.3 million bales in the period, compared with 29.9 million bales a year earlier. A bale weighs 480 pounds (218 kilograms).
Cotton prices have dropped in the past two months amid concern about demand, particularly in China, where the government is trying to reduce near-record stockpiles at a time of slowing economic growth.
Tuesday’s import estimate “will have to be bearish on prices,” Sid Love, president of Sid Love Consulting Services in Overland Park, Kansas, said in a telephone interview. “This is another indication that actual GDP is probably lower than what the official number tell us” and “that’s why demand is declining,” he said.
The USDA will update its world supply and demand statistics on Sept. 11. Last month, the agency estimated U.S. exports for 2015-2016 at 10 million bales, down from 11.2 million a year earlier, and the lowest since 2000-2001. Last week, Barclays Plc said China may stop importing the fiber by 2018, and may become a net exporter the following year as the nation’s textile industry shrinks amid foreign competition and cheap polyester prices.