China is Top Early Destination for U.S. Cotton

DENVER, CO – The top destination this marketing year for U.S. cotton is China, according to a recent CoBank quarterly report. Tanner Ehmke is Manager of CoBank’s Knowledge Exchange and explains that China actually held the position as the standout buyer of U.S. cotton last quarter and entered the new marketing year, which began on September 1 as the top destination for U.S. upland cotton. Shipments to China in the opening weeks of the crop year were running 667 percent higher, year over year, while outstanding sales to China were 34 percent higher as the Chinese government replenishes state reserves. Despite strong Chinese purchases though, total cotton demand remains weak. Global retail demand for clothing and apparel has yet to recover from the economic shock of the COVID-19 pandemic with the global textile industry operating on a limited schedule. U.S. cotton prices have rallied in recent weeks on the support in equity and energy markets but policy risk with China may impact exports in the quarter ahead. The U.S. announced sanctions on cotton, yarn, and apparel exports from Xinjiang province in response to human rights violations. With 85 percent of China’s domestic cotton production is in Xinjiang, the country may be forced to reduce its reliance on imports. Cotton in strategic reserves may also buffer domestic demand should the Chinese government reduce purchases of U.S. cotton.
(SOURCE: All Ag News)