Less Cotton in China?
Several years ago when I was working for the Globecot News Network (www.commoditynetwork.com), I wrote a story detailing the decline of China’s cotton production in lieu of the need to “import what you wear and plant what you eat.” I was a bit premature with my forecast, but there is no doubt China is now on the road to producing less cotton.
Recently announced government policies are ensuring production will primarily be in the western part of the country (Xinjiang province), while eastern land, once dedicated to cotton, will be used for corn, rice and other grains. Eventually, there will be very little cotton, if any, produced in the east, while overall production will hover around five million metric tons (or less) and consumption will fluctuate between seven to eight million metric tons, leaving imports to fill in the gap.
Interestingly, despite the decline in cotton production, China hopes to keep a consumption ratio of approximately two-thirds domestic and one-third imported. This will be extremely difficult to maintain. Water, land and logistics are just a few of the yearly headaches facing Xinjiang producers. And, though the province does produce excellent quality cotton, it still has trouble consistently meeting the volume needs of the eastern-based textile mills on a regular basis.
The unfolding China story will have a huge and profound impact on the U.S. cotton industry.”
Perfect Timing
Having spent the last two months interviewing FCStone’s textile mill and cotton merchant client base in China, I can tell you the most common feedback I have heard is “can you help us secure high quality cotton on a consistent basis? Our clients need higher count yarns, and we can’t make any money in the low count world.”
The unfolding China story will have a huge and profound impact on the U.S. cotton industry – producer of the highest quality cotton in the world. This is a phenomenal opportunity to match consistent high quality production with consumption based on direct and firsthand feedback from the world’s largest consumer of cotton.
Brands such as Bayer’s FiberMax and Stoneville cotton are perfectly positioned for China’s textile mill’s needs. At FCStone, we are positioning our global client base of both cotton producers and consumers to take advantage of this strategic shift. It will be exciting to watch and participate in this next stage of development for the U.S. cotton industry.
From Fiber To Fabric
- China is producing less cotton.
- China’s mills need high-quality cotton.
- Excellent opportunity for U.S.
- Mills need higher count yarns.
- Ideal position for FiberMax and Stoneville cotton.