Cotton Futures Gain As China Ramps Up Buying

Market News

Cotton Futures Gain As China Ramps Up Buying

Cotton futures gained last week after the China Cotton Association released data indicating robust demand for the fibre from the third largest cotton importer. Cotton for May delivery rose 1.2% to 78.08 cents a pound on the ICE Futures US exchange.

Chinese imports for last month soared 146% year-on-year to 138,100 tons, according to the China Cotton Association. The news follows a 20% rise in January to 114,924 tons. Cotton futures have been rising on robust demand for US fibre overseas and the solid demand from China comes despite the Chinese government's daily auctions of 30,000 tons of cotton from its stockpiles to feed it domestic market. Domestic mills in China have been buying the imported fibre to blend with China's older cotton. "Growers should be poised and ready to quickly take advantage of new crop price rallies," said John Robinson, cotton marketing economist at Texas A&M University. The market has yet to return to "normal" conditions after China accumulated massive stockpiles of fibre between 2011 and 2015. Cotton Inc. wrote in its March economic newsletter that while bales of cotton are dwindling, world stocks at the end of this year are still expected to be 50% higher than they were in the mid-2000s.