China, the world’s top cotton consumer, will produce 5.6 million tonnes of the fibre in 2015, down 9.3 percent from the previous year, said the National Bureau of Statistics on Friday, blaming the decline on a drop in planted acreage for this year’s crop.
The figure is higher than recent trade estimates, many of which put this year’s cotton output at less than 5 million tonnes after poor summer weather pulled down yields. “Considering the inventory and poor domestic consumption, (the output drop) is not a big deal,” said a cotton trader who expects the total crop to be around 4.5 million tonnes.
China has a state stockpile of close to 11 million tonnes of cotton, due to a now-abandoned state scheme to support farmers. Efforts to sell off some of its stocks earlier this year had limited success, partly because of weak demand for cotton fibre from the downstream market, a trend that has persisted for much of the year.
Prices on the Zhengzhou Commodity Exchange fell to a low of less than 11,500 yuan ($1,775) per tonne last week, despite the smaller crop, underscoring the market’s weakness. “Demand continues lacklustre both in (China’s) domestic and import markets,” said cotton merchant Reinhart in its weekly report on Thursday.
Traders do not expect China’s smaller crop to lead to stronger demand for imports with Beijing keen to restrict overseas buying to boost consumption of its domestic stocks. High temperatures in Xinjiang this summer caused a high rate of shedding of cotton bolls, or pods containing the fibre’s seeds, reducing yields and the length of the region’s prized long-staple fibre. Rainy weather and early cold weather later in the year further reduced output, said traders. The statistics bureau estimates output in the region – which usually produces around 60 percent of China’s cotton – at only 3.5 million tonnes.
Output in other parts of the country was largely impacted by a smaller planted acreage, with provinces outside Xinjiang planting 16.5 percent less cotton than in 2014, said the bureau. Overall, there was a 10 percent drop in land devoted to cotton this year, it said. China gives higher subsidies to growers in Xinjiang than other regions, leading farmers elsewhere to plant other crops.