Recently, the China Cotton Association held an online video conference with the National Cotton Council (NCC) of the United States. Adams, president and CEO of the National Cotton Council, pointed out that the implementation of the first phase of the China-US agreement has increased the number of U.S. investments in China. Cotton exports have contributed to boosting the U.S. cotton trade. In 2020, cotton exports to China, Vietnam, and Pakistan accounted for more than 60% of the total U.S. cotton exports, of which China imported 980,000 tons.
According to Chinese customs statistics, China imported a total of 2.15811 million tons of cotton from January to December 2020, of which US cotton accounted for more than 45%, followed by Brazil and India, accounting for 29% and 12% respectively. US cotton imports exceeded Brazilian cotton imports , Indian cotton is far behind (the gap is significantly higher than the expectations of some trading companies and cotton textile mills), and the phenomenon of “falling behind” in Indian cotton imports is even more prominent, with low quality indicators, poor consistency, high impurities, and mostly foreign fibers. The “flaws” of Indian cotton, but its advantages of low price, short transportation distance (low freight, timely shipment) and large bonded volume cannot be ignored.
The author believes that under the combined effect of internal and external factors, the proportion of Brazilian cotton in China’s total cotton imports in 2021 will be further compressed and squeezed out by US cotton and Indian cotton, and there is a risk of continued decline (although in recent years In 2017, Brazilian cotton quality, spinnability and other indicators were gradually recognized and favored by Chinese cotton textile enterprises, and there were not many fans). The reasons can be summarized as follows:
First, according to the first phase of Sino-US trade According to the agreement, China will continue to sign a large number of contracts to import U.S. cotton in 2020/21 and 2021/22 (estimated U.S. cotton import volume target is 1 million to 1.1 million tons), and the number of cotton import quotas within the 1% tariff and sliding tariff processing trade quotas is limited Under the premise, priority will be given to U.S. cotton;
Secondly, the cotton planting area in Brazil in 2020/21 has not only declined significantly, but severe drought in the early stage and continuous rainfall in the later period have led to uncertainty in this year’s cotton output and quality. The uncertainty is very high (CONAB predicts that the output of Bahia will decrease by 19.8% year-on-year, and that of Mato Grosso will decrease by 14% year-on-year). Chinese traders, textile companies, etc. are very cautious in signing contracts for Brazilian cotton with shipping schedules from August to October;
Third, Indian cotton exports to China are catching up in 2021, narrowing the gap with Brazilian cotton. On the one hand, the current quotation of Indian cotton for cargo, bonded and customs clearance is still significantly lower than that of Brazilian cotton and US cotton, and the price/performance advantage is relatively strong; on the other hand, unlike Europe, the United States, Brazil, etc., which are still trapped in the whirlpool of the COVID-19 epidemic (land transportation, warehousing, shipping, etc. are affected by (affected to varying degrees), India has followed China and other Asian countries in resuming production, sales and transportation of cotton, cotton textiles and clothing ahead of schedule;
Fourthly, in recent years, at the level of variety improvement, planting and management After a series of upgrades such as production improvement, harvesting, and ginning equipment updates, the gap between Brazilian cotton and U.S. cotton in various indicators such as fiber length, strength, and impurities has continued to narrow, and its substitutability has increased. However, the export quotation of Brazilian cotton has also Subsequently, it has moved closer to the same quality of US cotton and even been higher than US cotton in stages. The high planting costs and strong hype have led to a decline in the international competitiveness of Brazilian cotton. </p
