China May Increase Cotton Imports by 30 Percent
March 24, 2010 Bloomberg
China, the world’s biggest cotton importer, may increase purchases of the fiber 30 percent this year and drive up global prices as growers plant a smaller crop, a state-affiliated researcher said.
Imports may be more than 2 million metric tons from 1.53 million tons last year, Mao Shuchun, cotton researcher at the Chinese Academy of Agricultural Sciences, said from central Henan province.
Planting of cotton in China this year may fall 4.9 percent from last year’s 74.25 million mu (5 million hectares), “so it’ll probably fall below 70 million mu,” Mao said. “I don’t think boosting planting is possible. The best scenario is we may see the same area being kept.”
“Cotton supply in inland provinces, outside main producer Xinjiang, is extremely tight,” said Dong Shuzhi, an analyst at Jinshi Futures Co. in Henan. “We think the government will issue another million tons of import quotas” on top of the 1.89 million tons already allotted. China controls its cotton imports by issuing permits to qualified users.
China is forecast to buy 2.1 million tons this year, out of 7.5 million tons exported worldwide, according to the USDA.
Farmers throughout China have reduced cotton acreage and boosted grain planting since 2004, when the government started price-support policies for wheat and rice and stockpiling of corn, Mao said. The policies favoring grain gave farmers more assurance than the volatile cotton prices, he said.
In 2008, when cotton prices plunged amid the financial crisis, many farmers lost money, Mao said. Even as prices recovered last year, farmers on average made only 500 yuan ($73) per mu, Mao said. Growing fruit or vegetables can generate 10 times more revenue than cotton, Mao said.
“The fruit trees have already been planted, so you’d have to cut them down” if cotton acreage is to be expanded, he said.
(Story found in original format here.)
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