American cotton farmers are wondering how long China will keep buying cotton to rebuild its state reserves, a program that has helped boost fiber prices in the international market, a US cotton industry official said. Gary Adams, vice president and chief economist of the US National Cotton Council, said at the annual Beltwide Cotton conference here that as of December 22, 2011, China has bought 8.3 million (480-lb) bales of cotton.
"The real unknown is how long that (buying) will last," he said. China is the world's top producer and consumer of cotton because of its booming apparel industry. The US Agriculture Department's monthly supply/demand report in December forecast Chinese cotton imports in 2011/12 (August/July) at 15.5 million bales, up 1.5 million from the November estimate.
The buying by the Chinese has helped boost cotton futures on the ICE Futures US exchange from lows around 85 cents per lb last month. The key March cotton contract finished Thursday at 94.74 cents a lb. Cotton traders are worried that if the Chinese buying slows down, and with other demand still fragile because of the shaky global economy, prices could slip as a result.
The US normally supplies more than two-thirds of Chinese cotton imports, with the rest coming from countries such as India. "In China and India, the potential increase is several million bales," Adams said, adding that cotton consumption is expanding in those Asian powers because of economic growth and a steady rise in their populations.