China's cotton imports soared in December and the country will soon issue another import quota of 1.1 million tonnes (5 million 480-lb bales), offsetting the bearish impact of a US crop report. The US Agriculture Department's monthly supply/demand report on Thursday raised world 2011/12 end-of-season cotton stocks to 58.35 million bales from 57.67 million.
Ending stocks in top consumer China were estimated at 17.05 million bales, from 15.55 million forecast previously, and this accounted for most of the rise in the world figure. China's December cotton imports rose 71 percent from a year earlier to 790,400 tonnes, and a Chinese industry website said Beijing would soon issue another 1.1-million-tonne cotton import quota.
"World stocks without China are actually lower," said Sharon Johnson, senior cotton analyst at commodities brokerage Penson Futures in Atlanta, Georgia. She said the USDA figures were only "negative at first blush". Traders said the prospect of significant Chinese cotton imports may account for the fact that cotton futures on ICE Futures US did not sell off as sharply as anticipated.
The key March cotton contract fell 1.19 cents to trade at 95.68 cents a lb at 10:23 a.m. EST (1523 GMT), moving in a narrow range from 95.41 to 97.50 cents. Mike Stevens, an independent analyst from Mandeville, Louisiana, said cotton should have been "vulnerable to a setback" but the market was holding up and the additional Chinese imports may have something to do with that. The Chinese government wants to beef up cotton stocks to prevent a repeat of what happened during a record cotton rally in 2011, when Chinese mills scrambled for supplies and the state could not alleviate price spikes, traders said.