China signaling buying US cotton

China has started showing interest in buying United States’ cotton. There has been some movement in the United States’ cotton to China, which is a positive signal. This is in anticipation of a positive trade deal between China and the United States.

Cotton industry stakeholders who met this morning at Lubbock-based Plains Cotton Growers’ (PCG), Inc, focused their attention on the planting season ahead. With the ginning process completed this week in the High Plains of Texas, it is hoped that the High Plains’ cotton production will cross the 4 million bales mark.

“Demand for cotton is there,” stated one merchant at the meeting. This is evident at the December Futures value for the new crop (77.60 cents). This is somewhat high, given the volume of cotton left to sell, somewhere about half to three quarter of a million in the United States.

China’s buying is certainly hampered with the 25 per cent  tariff and the future buying in volumes depends on a favourable trade deal, that needs to be accomplished sooner. While China normally goes for high quality cotton, they are interested in lower grades (31 and 41 colour grade) at a discounted price. Trade deal will enable to push these cottons into the China market.

“Everybody is hopeful that a deal can be finalised sooner to clear the way for cotton to move into China,” stated Shawn Wade, Director of Policy Analysis and Research at PCG. On the quality note, this year’s average micronaire for the cotton bales classed at Lubbock USDA classing office has been 4.07, which is good number compared with the last year’s average of 3.21.
By: Seshadri Ramkumar, Texas Tech University, USA