“Ferocious” China cotton buying spree continues

GLOBAL: “Ferocious” China cotton buying spree continues

By Richard Woodard | 6 March 2013

China’s “ferocious” cotton buying spree is continuing, but may diminish as reserves match consumption, according to forecasts from the International Cotton Advisory Committee (ICAC).

The inter-governmental body’s latest update puts China’s cotton stock at 8m tons – or 47% of global stocks – at the end of the 2012/13 season, following the country’s purchase of 3.12m tons last season.

ICAC added: “The Chinese cotton reserve continues to expand into this season at a ferocious rate, adding close to 6m tons of cotton between September 2012 and January 2013.”

The report attributes this build-up to China’s stated desire to ensure supplies of major farm produce, but adds that the country’s ending stocks-to-use ratio is 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 of 2.9m tons this season,” it said.

ICAC projected global ending stocks for 2013/14 at 15.77m tons, down 1.23m tons on 2012/13, adding that 2013/14 production was likely to hit a four-year low at 22.56m tons, down 14%.

Meanwhile, consumption is set to rise only slightly to 23.79m tons, it added.

The forecast fall in ending stocks contrasts with US Department of Agriculture predictions of a continued rise next season, projecting stocks at 17.7m tons.

Meanwhile, the USDA forecasts a smaller drop in production, down 2.9%, in 2013/14.

Sectors: Fibres & fabrics, Sourcing