China’s Cotton Imports Seen Exceeding USDA Estimates
Cotton imports by China, the biggest consumer of the fiber, will exceed a U.S. estimate for the 12 months through July as government stockpiling to boost farmers’ incomes exacerbates a shortage.
Imports will be 3.8 million metric tons, according to the median of five analyst estimates compiled by Bloomberg. The U.S. Department of Agriculture forecast 3.3 million tons in a report on March 8.
Cotton in New York has jumped 18 percent this year, the most among 24 commodities tracked by the Standard & Poor’s GSCI Spot Index. The fiber on the Zhengzhou Commodity Exchange has climbed 6.6 percent this year after dropping 33 percent in the previous two years. The Chinese government bought 6.41 million tons as of March 19, or 84 percent of the harvest, according to industry website cncotton.com.cn.
“Imports will increase in the months ahead as the government may issue more quotas to quench demand from textile makers, allowing more shipments to come in,” Kuang Bo, an analyst at Yongan Futures Co., said by phone from Hangzhou.
The contract for May delivery on ICE Futures U.S. in New York fell 0.2 percent to 88.90 cents a pound at 4:15 p.m. in Beijing. Futures for September delivery in Zhengzhou climbed 0.2 percent to close at 20,205 yuan ($3,252) a ton.
China’s textile makers have seen a recovery in demand since September last year, Zhang Hongxia, chairwoman at Weiqiao Textile Co. (2698), the world’s largest yarn maker, said in a statement on March 18. A reduction in inventory by textile makers also contributed to an industry wide recovery, Zhang said.
Government inventories are set to climb to about 9 million tons by end of March, as the government also bought 3.13 million tons of cotton in 2011-2012, Yongan’s Kuang said.
With warehouses filling, the government may also step up sales from its reserves at below 19,000 yuan a ton, she said. Du Ying, an analyst at Wanda Futures Co., said from Urumqi in the nation’s western cotton-growing region, China may sell about 900,000 tons of new-crop cotton from its stockpiles.
The USDA forecast an 18 percent drop in production this year from the U.S., the biggest exporter, to 14 million bales (3.1 million tons).
On March 28, the department will release its first estimate of planting intentions based on a survey of growers. In 2011, output was 15.57 million bales, after the worst drought in at least a century decimated crops in Texas, the biggest producer.
China’s 2013-2014 harvest will be above 7 million tons, lower than 7.6 million tons estimated for 2012-2013, Xi Jin, manager of international cooperation at the China National Cotton Information Center, said in Singapore today.
To contact Bloomberg News staff for this story: Feiwen Rong in Beijing at email@example.com