As land rent and labour costs have continued to rise in China, growth in cotton production is restricted, and thus the import volume of cotton has continued to increase over the last several seasons. Total cotton imports in China are expected to increase 47 percent from 1.3 m in 2017/18 to near 2 m tonnes in 2018/19.

From August 2018 to March 2019, China has imported only 180,000 tonnes of US cotton, on pace for a possible total near 250,000 tonnes from the United States for the 2018/19 season. Other major exporting countries have increased quantities to China including Australia and Brazil as well as almost all other countries including India, Benin, Sudan, Greece, Cameroon, Burkina Faso and Mali.

State reserve sales

As required by the WTO, China administers a tariff rate quota of 894,000 tonnes per year subject to a 1 percent tariff. On April 12, the National Development and Reform Commission of China approved a cotton sliding tariff import quota of 800,000 tonnes for 2019. Subsequently, China also announced that the reserve auction will begin on May 5 and run through September 30 with reserves being offered in 10,000 tonne quantities each. While reserves may release additional quantities of cotton to the market, the quality of the cotton being offered will need to be considered as the auction may serve to rebalance and refresh the state reserve.

Source: ICAC CTM, May 1, 2019

Excerpt from Bremen Cotton Report No. 17/18 – May 2019.

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