China's cotton crop expected to fall by 1M tons this year

The cotton price briefly shed somewhat more than 1% yesterday but was soon able to recoup this loss and ultimately closed largely unchanged at 66.5 US cents per pound. Despite weak Chinese demand, the cotton price has risen by more than 7% since the beginning of last week. 

"According to data from the customs authorities, Chinese cotton imports plunged in July by 62.3% as compared with the previous month. In the first seven months of this year, Chinese cotton imports thus decreased by 38% in all as compared with the same period last year. That said, China has a good 11 million tons of cotton in stock in its own warehouses, which accounts for approx. 50% of worldwide stocks", says Commerzbank. 

After the international cotton price neared the Chinese cotton price recently, demand for domestic cotton increased, which could additionally cause imports this month to slump. The Chinese government is attempting at present to sell the high stocks in daily auctions, but has so far been able to sell only just under 4% of the total quantity on offer. 

The China Cotton Association downwardly revised its estimate for the Chinese cotton crop yesterday to 5.5 million tons, which would equate to a decline of 1 million tons as compared with the previous year's crop. Given the high stocks and weaker demand, however, it is questionable whether this will result in higher imports.