China's cotton imports, one of the most important numbers in the market for the fibre, will fall less strongly than some observers believe – as long as prices do not rise too far above current levels.
The International Cotton Advisory Committee forecast a 40% slump to 3.1m tonnes in 2013-14 cotton imports by China, the top buyer of the fibre, besides the biggest producer and consumer.
However, even this figure is far bigger than numbers from many other commentators, including the US Department of Agriculture, which sees China's imports at 2.40m tonnes (11.0m bales), while Rabobank has forecast them at 7m bales (1.52m tonnes).
China, which holds more than one-half of world cotton inventories, has begun selling down its huge stocks, which are the result of a policy of offering a guaranteed, and high, purchase price to support domestic producers.
Even so, China is selling its cotton from state reserves at the equivalent of 133 cents a pound, a price well above that on the international market – meaning that consumers still have an incentive to import.
"The sales price of cotton from China's reserve is significantly higher than the import price with a 40% tariff," the committee said.
"Thus, unless international prices rise above the mid-90s cents a pound and imports would be lower than expected, China's imports are projected to remain around 3.1m tonnes for the season."
The forecast assumes China sells some 2m-3m tonnes of cotton from its reserves, to leave them at 11m-12m tonnes at the end of this season.
The USDA forecast the end-stocks figure at 12.6m tonnes.
Record high stocks
The comments came as the ICAC, for the first time since July, maintained its forecast for world cotton prices this season, at 88 cents a pound, if a forecast well down on the initial estimate in April of 118 cents a pound.
Indeed, the committee trimmed by 440,000 tonnes its forecast for world stocks at the close of the season, reflecting a lower estimate for output and higher consumption expectation, although – at 20.3m tonnes – inventories would still end the season at a record high.
For 2014-15, the ICAC reduced its forecast for carryout stocks by 730,000 tonnes, albeit to a figure of 20.6m tonnes which would represent a further increase.
The committee expects world cotton output to exceed demand next season for a fifth consecutive season.
In New York, the best-traded March cotton futures contract stood unchanged at 78.62 cents a pound in late deals.