By admin       2018-05-04

Threats to impose higher tariffs on Chinese imports of cotton from the US – the world's leading exporter of the fibre – are adding another layer of uncertainty to the cotton market. Import tariffs remain a potential concern in the global cotton trade, the International Cotton Advisory Committee (ICAC) confirmed in its latest monthly forecast released this week; while US-based Cotton Incorporated has gone one step further in warning that if the proposals are enforced, they will influence trade patterns. Raw cotton is one of many products caught up in the ongoing trade row between Washington and Beijing resulting from an investigation into unfair Chinese technology and intellectual property policies and practices. President Donald Trump last month signed an executive order to levy tariffs on US$50bn of imports in China, Under Section 301 of the Trade Act – with an even larger list of additional goods, collectively valued at $100bn, also under consideration. China hit back with its own list of goods subject to possible retaliatory duties – including an additional 25% duty on US cotton. US cotton is a key import for the Chinese clothing industry; and China is the US's second largest export market. "Despite lowered projections for 2017/18, the United States remains the leading global exporter and will likely remain so in the 2018/19 season with exports projected at 3.5m tons," the ICAC notes in its latest monthly forecast released this week. Looking at the wider picture, the inter-governmental group notes that cotton prices have so far remained high in the 2017/18 season, at an average of 84.63 cents per pound as measured by the Cotlook A index. But it trimmed its forecast for cotton prices in 2018-19 to 82 cents/lb. The body also says higher prices are expected to lead to moderate growth in planting for the 2018/19 season, which starts in August. World area under cotton has averaged 32.4m hectares over the last ten years. New support policies for cotton in the US were passed in February, and its planted cotton area is expected to increase in 2018/19 by 11% to 5.08m hectares. However drought conditions remain a concern for the cotton area in West Texas, which represents around 25% of US production, the ICAC says. Planted area in India is expected to decrease to 11.9m hectares in 2018/19. Chinese planted area is expected to remain stable based on the continuation of Chinese support policies. The Chinese reserve auction to sell cotton stocks this year began in March and is expected to continue through September, thus far releasing 30,000 tons per day for sale. Daily sales through April have sold 100% of high quality Xinjiang quantities available, while lower grades have sold at 25% of available quantity. Meanwhile, world cotton consumption is expected to continue to grow steadily through 2018/19 to a projected 26.7m tons, up from 25.5m tons estimated in 2017/18. Factors buoying cotton include strong textile demand in emerging markets, the rising production costs of synthetic fibres, and growing awareness of the environmental damage being caused by microfibre pollution. Global imports are also expected to increase to leading importers, with those into China projected to continue to increase for the fourth consecutive year to 1.5m tons. While Chinese import figures continue to increase, Bangladesh remains the leading global importer.

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