Cotton production in China, the world's top consumer of the fibre, dropped 2.2 percent in 2014 from the year before, the government said on Wednesday. The National Bureau of Statistics said output fell to 6.16 million tonnes as the amount of land used to grow cotton shrank by nearly 3 percent. China's output numbers are typically closely watched by global exporters as declines often boost appetite for overseas cotton, supporting global prices.
But imports are set to drop sharply next year after Beijing said it would slash the number of import quotas it issues. The bureau's total output numbers were lower than the latest US Department of Agriculture's estimates of about 6.5 million tonnes, as well as estimates by the China Cotton Association. They were close to trader predictions, however.
The bureau also said that output in Xinjiang, China's top cotton growing region, was 3.68 million tonnes, lower than most market estimates of around 4-4.1 million tonnes. Official estimates of Xinjiang's crop are significant this year as they will be used to calculate the amount of subsidy received by farmers under a new policy being rolled out in the current crop year. The calculations will be based on total volumes produced in the region as well as an average market price for cotton sold between September and November. "If this is the base, the total subsidy farmers will get may be smaller than expected. That could mean they will plant less next year," said a trade source who declined to be identified.