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China’s cotton supplies tight

China’s cotton reserve, at only 1.4 million tons, is a factor for U.S. cotton producers to keep an eye on, according to Joe Nicosia, Allenberg president and CEO. “They’re struggling on whether they should sell an additional amount of old crop cotton to relieve extremely tight domestic supplies.”

If China does continue to sell that reserve, the next question is whether they’ll buy cotton to replace it. “Demand at Chinese textile mills remains strong, spinning margins remain good and profitability has been good. The mills, especially if the Chinese cotton crop falls, could easily soak up all the Indian crop availability and still require cotton from the United States. Our big crop is coming at an extremely opportune time for us and U.S. growers because we’re going to have a very large demand to meet it.”

“The rest of the world is going to use 18.3 million bales more than it produces. If the United States does not have a huge crop, the world would not have enough cotton to meet demand. Foreign stocks are extremely low, so the export prospects we have today could easily blossom and move up, if the overseas crops are not also extremely large.”

Nicosia also urges cotton producer to keep an eye on grain prices. If there are any problems in the grain growing season around the world “we could find ourselves in a new fight for acreage around the world.”

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TAGS: Cotton
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