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China - Stockpiling Cotton Supplies

China - Stockpiling Cotton Supplies

02 November 2012

ANALYSIS - China accounted for half of the world cotton trade in 2011 and one-third this year, said Richard Pottorff, chief economist for Doane Advisory Services, at Doane's fall conference in St. Louis, writes Sarah Mikesell, TheCropSite senior editor.

"What China does in the world market is hugely important and their demand is declining," he said. "China's demand is down from 50 million bales to 35 million bales."

The two other significant cotton suppliers are the US and India.

In 2011, all of the sudden China decided to increase stocks and now they have accumulated almost 36 million bales of cotton stocks, he said.

"That's a year's supply. The US has five million bales and we think we got a lot of cotton," he noted. "I think they decided that when cotton prices soared, that next time around they wanted to have their own supply so they don't have to go out and buy it. However, the likelihood of a big run up in cotton prices is dampened by the idea that China isn't going to be a big buyer."

Doane will be hosting another conference this year targeting investment professionals with an interest in the agriculture sector. Doane Invest - Agriculture Symposium will be held in New York City on December 11-12, 2012. Click here for more information.

Sarah Mikesell, Senior Editor

Sarah Mikesell, Senior Editor

Top image via Shutterstock

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