Despite of an increased production and imports the Chinese cotton stock is expected to fall, told by the US official forecast. The world cotton demand will outstrip consumption for the third year consecutively as the government of china continues to take down its massive stocks.
According to the latest cotton outlook of the US Department of Agriculture, the consumption exceeds the demand by 6.0 million bales. This entire decline was down to China, were stocks are seen falling by 9.1 million bales despite rising imports and domestic production. Further the USDA said that the decline in Chinese stocks could set the stage for larger imports in the season to come.
“China’s production is projected to rise for the second consecutive season, as production in the east has largely stabilized and Xinjiang production continues to grow,” the USDA said. The USDA saw Chinese imports up 500,000 bales year on year, at 5.0 million bales. However, the rising production and imports will not be enough to stem the decline in stocks, to 22.0 million bales, their lowest level since 2011-12, said was so by the experts. It is also said that the Chinese cotton consumption is seen at 37 million bales, a six-year high and the third consecutive year of growing demand.
It is also said that, “Assuming similar patterns of reserve sales in 2017 and 2018 to 2016, the China reserve could fall to just over 40% of its peak of 53m bales by the end of 2017-18.” “Declining reserve stocks might set the stage for a more liberal China import policy in 2018-19.” Globally, the USDA saw 2017-18 world cotton demand outstripping supply for the third consecutive year, drawing down world stocks down by another 6.0 bales.
At the same time, the forecast is world stocks to decline, but by a smaller amount. In case of production, found was “increased expectation of planted area in some of the major producing countries, including India, Pakistan and the US”. But USDA saw falling stocks in China outweighing rising stocks elsewhere. Chinese stocks were seen falling by 2.4 million tonnes, causing global stocks to fall by 693000 tonnes, or 3.2 million bales. May cotton futures were up 0.5 % in midday deal in New York, at 76.45 cents a pound.
The Chinese government is expected to start sales from its cotton reserves on the sixth of this month and to continue offering around 30,000 tons a day until the end of August 2017. More cotton may be put up for auction if sales are strong and market prices rise. Last year, around 2.6 million tons were sold through the end of September 2016.
