THE United States share of China cotton imports fell to 18 per cent in 2018/19, down sharply from 45pc in 2017/18, and well below the 30pc share seen over the previous five years, according to the latest report from the United States Department of Agriculture (USDA).

This was the lowest market share the US has had since China reformed its cotton sector in 1999.

US cotton faced two challenges in China in 2018/19; first, the additional tariffs being placed on certain imports of US cotton; and second, the arrival on the world market of two consecutive record Brazilian crops.

India’s market share in China was also below the five-year share.

India’s share has been trending down since China began limiting imports outside of the World Trade Organisation (WTP) tariff rate quota (TRQ). With limited access, importers prefer to bring in machine-picked cotton.

Also, India’s continual increase in its domestic Minimum Support Price coupled with lower world prices limits its cotton competitiveness.

Uzbekistan’s market share was also at the lowest level since China’s cotton sector reform, but this was largely due to Uzbekistan’s domestic policies which are expanding domestic use and limiting exports.

Brazil takes advantage

Brazil benefited most from the lower market shares by the US, India, and Uzbekistan, while Australia, West African countries, and most other exporters saw small increases in market share.

Brazil’s then-record 2018 crop provided exporters with ample supplies, and the prospects of an even larger 2019 crop gave exporters an incentive to ship the cotton rather than carry it over.

Brazil also benefited from purchases for China’s State Reserve. Traditionally, State Reserve purchases have been primarily of US cotton, but due to the ongoing trade dispute between the US and China, the State Reserve purchased almost exclusively Brazil cotton in 2018.

With US-China trade tensions ongoing and Brazil having a second record crop, it is unlikely US market share will recover to historic levels in 2019/20.

Higher world stocks

Meanwhile, globally, the USDA forecast for 2019/20 shows higher cotton beginning stocks and lower world consumption and trade, resulting in higher ending stocks.

Consumption is down in several countries, notably China and India.

The USDA forecast for cotton in the US shows lower production and consumption from last month, with ending stocks unchanged, and the US season-average farm price is projected at 58 cents per pound, down 2 cents.

Source: USDA

Grain Central: Get our free daily cropping news straight to your inbox – Click here