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Cotton: Will China Cause Fall in Global Production?

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While Beijing lowers prices of domestic cotton reserves destined for local factories, professionals expect a negative impact on its production. Some 6 million tons of cotton should be produced in China in 2014/2015, marking a significant, 10% drop.

The world’s number one cotton consumer, which had contributed to the material’s soaring prices in 2011 by amassing the largest national stockpile of cotton in the world, is now drastically reducing supply. Globally, cotton production is now expected to fall by 2%. And yet cotton consumption has risen by 3% to 24.3 million tons, the drop in Chinese companies’ consumption offset by an increase observed in India, Pakistan and Turkey. The production decrease will not go without an effect on trade.

“World trade is expected to decline in 2014-15 to 8.2 million tons from 8.7 million tons forecast for 2013-14”, according to the International Cotton Advisory Committee (ICAC). “As with the production, this decline stems mostly from China, where imports in 2014-15 are expected to be 2.2 million tons, down by 30 percent from 2013-14 and 60 percent from its peak of 5.3 million in 2011-12. However, China’s decline will be partially offset by imports from Bangladesh, Indonesia and Vietnam, which are expected to import a total of 2.4 million tons in 2014-15, an increase of 13 percent from 2013-14”.