The Secretariat projects China’s cotton stock at 8 million tons, equivalent to 47% of global stock, at the end of2012/13 season. Last season the Chinese government purchased over 3.12 million tons of cotton for state reserves at a floor price well above the world market price. Consequently, the gap between domestic and world prices triggered record imports of 5.3 million tons contributing to a build up of domestic stocks estimated at 6.2million tons at the end of 2011/12.
The Chinese cotton reserve continues to expand into this season at a ferocious rate, adding close to 6 million tons of cotton between September 2012 and January 2013.To a large extent, China’s development and trade policies have been shaping the development of cotton in China. In the recent No.1 Central Document, an annual document that details China’s policy priorities, the government reiterated ensuring grain security and supplies of major farm produce as this year’s top priority, thus China is likely to continue to conduct temporary state reserves of cotton.
On the other hand, with the ending stocks-to-use ratio estimated at 0.97 for the current season, domestic cotton consumption is almost secured, an indication that the cotton reserve build up could slow down in the coming months, with projected total imports of2.9 million tons this season.
As for the rest of the cotton world, no major news has been reported since the Secretariat’s February report, thus maintaining the world production projection at 26 million tons and the consumption projection at 23 million tons for 2012/13. Global production is forecast to decline 14% to 22 million tons while consumption would remain stable at 23 million tons in 2013/14.
