China is likely to reap bumper cotton output this year, and as such, to reduce pressure on domestic cotton stocks, the Government may not allow cotton imports beyond the limit set for the current year, the China Cotton Association (CCA) has said.
This year, though China’s cotton cultivation acreage has reduced compared to last year, the output is far better than that reaped by same time last year. Hence, the country’s cotton output, unless marred by floods in autumn affecting the crop, is expected to be enough to meet the domestic demand, CCA said, citing a report from the Cotton Research Institute of the Chinese Academy of Agricultural Sciences.
During the first half of the current year, domestic cotton was priced around 5,248 yuan or US$ 824 per ton higher than the price of imported cotton, and hence several textile producers were prompted to import cotton. This built a pressure on domestic stocks, the report stated.
This year, price of new cotton is likely to keep at around 20,400 yuan per ton. However, factors like mounting stocks, possibilities of a fall in cotton production in the US and weak demand prompted by global economic slump, would not allow it to escalate further, the report said.
It also hinted that to maintain the enthusiasm of the cotton growers, the Government would continue with its policy of stockpiling domestic cotton. The Government has already announced the new procurement price of 20,400 yuan per ton, an increase of approximately three percent over last year’s price of 19,800 yuan per ton.
As per the CCA’s predictions, the country’s cotton output for the current year is likely to surpass the Government’s target of 6.99 million tons, which is already about six percent higher than last year.
The annual cotton import quota fixed by the Chinese Government is 894,000 tons, which attract one percent preferential tariff under the World Trade Organization rules.
However, depending on domestic demand, the Government can allow additional imports, but the same would be subjected to a tariff of about 5-40 percent.