US Cotton Industry Watching China Closely

Trade & Policy

US Cotton Industry Watching China Closely

The United States cotton industry is cautiously watching China in hopes that its imports may be on the rise. Addressing the Board of Directors meeting of Plains Cotton Growers (PCG), Inc. at Lubbock's Bayer Museum of Agriculture, Dr. John Robinson, professor and extension economist at Texas A&M AgriLife Extension Service, optimistically stated, "Sometime in the next few years, hopes are high that China's overall import levels may rise and may even be back to 16 million bales."

The statement caught the attention of the area-wide gin representatives and cotton farmers in attendance. Regarding the current market situation, demand is there for cotton. With the economy recovering slowly, consumers will start spending, and non-essential commodity buying should start to rise. Looking at recent export sales figures, Robinson stated if exports follow the current trend, cotton deliveries from the United States may be above USDA's estimate of 14.8 million bales. He expects USDA may increase their estimate by about half a million bales or so, but also cautioned about the heavy ending stocks which may impact the price. There are, however, reasons for optimism about enhanced imports by China in the next few years. According to Robinson, demand will be a positive influence, as will the need for newer stocks as China's reserves are now 5-6 years old. "When the China import situation improves, it will be a game changer," said Robinson.

The meeting opened with reports from various gins in the High Plains area, and it was quickly evident 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. Shawn Wade, PCG's director for policy analysis, noted, "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. "It was definitely below average micronaire for our area and not what we strive to produce," stated Verett.