The China Cotton Association has backed ideas of a further
drop in Chinese cotton plantings – although not to the extent of the
International Cotton Advisory Committee, which forecast area tumbling to a
The association said that a survey of Chinese growers
suggested a fall of 8.9%, to 4.25m hectares, in cotton plantings this year in
the world's biggest producing country.
The decline to the smallest plantings in more than a decade
reflecting rising costs and pessimism over profitability prospects, the association
said, with reluctance being further stoked by uncertainty about China's support
policy for cotton growers.
Ideas that China will revise its regime - whose high
guaranteed prices for cotton have supported values worldwide - gained support
on December 27 when Chinese Finance Minister Lou Jiwei said that policies for the
fibre, and soybeans, would "turn toward" subsidies to growers.
The International Cotton Advisory Committee last week came
in with an even more gloomy outlook for Chinese plantings, pegging them at 3.9m
hectares, a historically low figure.
According to US Department of Agriculture estimates, Chinese
cotton area, on a harvested basis, has fallen below 4m hectares only three
times since 1960.
China has supported domestic cotton production as a means of
guaranteeing supplies of a commodity of which it is the world's biggest
consumer too, in a textiles industry which employs some 23m people.
However, a side-effect of its cotton price support policy
has been, in lifting the price of domestic supplies, to leave domestic spinning
mills at a disadvantage, and prompt many textiles companies to turn abroad for cheaper
yarn, which is subject to far less restrictive import rules than cotton itself.
"Although China's production is expected to be lower in
2014-15, its consumption is also declining, and its government currently holds enough
stock for one-and-a-half years without any further imports or production," the
China's cotton inventories reached 11.8m tonnes (54.2m
bales) as of December 27.
The committee's comments came as it, for the first time in
2013-14, lifted its estimate for physical cotton prices this season, by 3 cents
to an average of 91 cents a pound, as measured by the Cotlook A index.
Prices averaged 88 cents a pound last season.
Separately on Monday, official data showed China's state stockpiling
so far in 2013-14 reaching 5.01m tonnes, up 331,160 tonnes week on week.
The full-season figure is deemed unlikely to match the
2012-13 total of 6.5m tonnes thanks to a smaller harvest last year.
New York cotton futures for March delivery stood 0.7% higher
at 83.50 cents a pound in late morning deals.