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China's cotton imports to fall for two more years

China's cotton imports are to extend their tumble for a further two seasons as the world's top buyer runs down its huge inventories, but purchases will stage a recovery, leading "rapid" growth in world trade.

Cotton imports by China, which is also the top grower and consumer of the fibre, will drop 22% in 2014-15 to 8.6m tonnes, and again the following season to 7.5m tonnes, the US Department of Agriculture said in long-term forecasts.

The decline, prompted by a change in Chinese farm support expected to end the country's record of stockpiling cotton at prices well above international market rates, will drag world trade lower next season.

"Contraction is expected in the short turn as China halts and then reverses its accumulation of stocks," the USDA said in its so-called baseline report.

At their nadir, China's imports will have plunged nearly 70% from their 2011-12 peak.

'Rapid growth rate'

However, volumes will stage a sharp recovery from 2017-18, as the lower domestic values enabled by China's ditching of its price support programme boosts fuels higher demand from mills.

The fall and revival in Chinese cotton imports, as seen by the USDA

2017-18: 9.2m tonnes

2016-17: 7.6m tonnes

2015-16: 7.5m tonnes

2014-15: 8.6m tonnes

2013-14: 11.0m tonnes

2012-13: 20.327m tonnes

2011-12: 24.533m tonnes

"China's reforms are expected to allow it to recover part of the share of world cotton consumption lost between 2009 and 2013, when some of China's textile production and cotton imports shifted to other countries," because of the elevated costs of the fibre encouraged by the price support scheme.

The revival will take China's imports above 21m tonnes in a decade's time, and fuel growth in world cotton trade, which "is projected to trend upward at a rapid 3.8% growth rate between 2014-15 and 2023-24", the USDA said.

Bangladesh, which has benefited from a shift by Chinese textiles groups to cheaper yarn importers, will also raise its imports strongly, overtaking Turkey to become the second-ranked buyer, with similar dynamics lifting Vietnam to third place.

'US share has fallen sharply'

However, the US, the top cotton exporter, will see its share of trade fall as rival producing countries raise output, catching up on yields through adopting more genetically modified crops.

"The US share of world cotton production has fallen sharply with the spread of new technology around the world in recent years, and its share is expected to continue falling in the long run, although far more slowly," the USDA said.

Furthermore, a rise in sowings of upland cotton this year, by 900,000 acres to 11.0m acres, will likely buck a trend of plantings stable at about 10.0m acres.

This year rise is thanks to "prices for competing crops falling more" than cotton values.

Industry forecast

The sowings estimate compares closely with a forecast from the National Cotton Council at the weekend that US farmers will plant 11.04m acres of upland cotton this year, encouraged by pricing signals, with a further 225,000 acres of extra-long staple crop.

However, the USDA baseline report has a mixed record with its cotton sowings forecasts. Last year, plantings beat the forecast 9.3m acres by close to 1m acres.

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