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Cotton industry watching China closely
Commodity Online | January 12 2018
UPDATED 18:41:52 IST

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United States’ cotton sector is cautiously watching China in hopes that its imports may be on the rise.

Addressing a gathering of about 80 people in Lubbock’s Bayer Museum of Agriculture, Dr. John Robinson, professor and extension economist at Texas A&M AgriLife Extension Service, optimistically stated, “Sometime in next few years, hopes are high that China’s overall import levels may rise and may even be back to 16 million bales.” Surely this caught the attention of area wide gin representatives and cotton farmers, who were attending the Board of Directors’ meeting of the Plains Cotton Growers (PCG), Inc.

The meeting opened-up with reports from various gins in the High Plains area. It was clear that the recent season witnessed variability between fields in terms of yield. “Variability best describes the yields across our area,” said Steve Verett, producer and executive vice president of PCG. According to Shawn Wade, PCG’s director for policy analysis, “more producers have reported that their yield was less than expected.”

Low micronaire has been an issue this season predominantly attributed to lack of maturity due to cold and cloudy weather in August. Commenting on this aspect, Verett stated, “definitely below average micronaire for our area and not what we strive to produce.”

With regard to current market situation, demand is there for cotton. With economy recovering slowly, consumer will start spending and so nonessential commodity buying will start to rise. Observing the recent export sales figures, Robinson stated if the exports follow the current trend, cotton exports from the United States may be above the USDA’s estimate of 14.8 million bales (480 lbs. each). He expects USDA may rise their estimate by about half a million bales or so. However, he cautioned about the heavy ending stock which may affect the price.

Couple of reasons are there for being optimistic about enhanced imports by China in the next years. According to Robinson, demand will be a positive influence and the need for newer stock as China’s reserves are 5-6 years old.

Market will reflect first on the increased demand from China and the farmers will follow in a year or two, like employment numbers, which is always a lagging indicator.

When the China import situation improves, it will be a game changer, said John Robinson.

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