China: Cotton Imports to Hit Four Year Lows

By Jim.Robinson|March 11, 2009

The combined effect of weaker textile mill demand, plummeting overall foreign trade, and an early Chinese New Year drove January cotton imports to the lowest level in years, prompting continued downward re-evaluations for projections of overall imports in 2008/09.

January imports fell -50.0% from a year earlier to 78,000 tons, or 358,254 bales—the lowest monthly volume in four years—as mills pared back shipments in response to gradually higher cotton prices and lackluster downstream demand. Adding to the misery, the steep January decline in overall imports weighed on shipments of most goods, including cotton. Coupled with Chinese New Year festivities starting at its earliest point in the last five years—January 26th—that dried up orders in the last week of the month, January volume sank to dismal lows.

This month marks the eighth straight decline in cotton imports, calling into question the optimism of full-year imports in 2008/09. The recent spate of falling imports caused several market observers to re-think their forecasts of 2008/09 Chinese imports.

In particular, USDA projections for Chinese imports this marketing year declined for the eighth straight month in February. After initially believing several months ago that Chinese imports would reach 14.5 million bales this year, these projections are now cut by more than half, falling to just 6.5 million bales. Full-year exports may still fall just short of this lower target. Through the first half of the marketing year, cumulative imports stand at less than 3.4 million bales, off -39.4% from the same first six months of 2007/08.

Should imports maintain this pace for the remainder of the marketing year, 2008/09 imports could fall to less than 7.0 million bales, just ahead of the current USDA forecast.