ChinaΆs cotton imports last month declined from a year ago but rose from August 2011. Growth in cotton yarn imports reached the equivalent of nearly 8.3 million bales of raw cotton in 2012-13.
Cotton futures settled with gains of 36 to 60 points beyond thinly traded October in light dealings Tuesday.
Benchmark December closed up 44 points to 84.44 cents, near the middle of its 112-point range from down 10 points at 83.90 cents to up 102 points at 85.02 cents. October settled down 23 points to 84.77 cents, while March posted the 36-point gain to 84.15 cents.
Volume slowed to an estimated 11,400 lots from 15,584 lots the previous session when spreads totaled 7,229 lots or 46%, EFS 2,182 lots and EFP 22 lots. Options volume totaled 2,914 calls and 1,696 puts.
A decline in U.S. crop ratings, slow maturity and uncertain lint quality prospects amid scale-down mill fixations offered support, analysts said.
Talk circulated that Chinese mills have quotas they could use to buy foreign cotton as a result of the 3:1 ratio program under which the government allocates a ton of import quota per 3 tons of cotton purchased from the national reserve.
Preliminary data put ChinaΆs cotton imports in August at 276,000 metric tons (1.28 million 480-pound bales, down from 305,546 tons (1.403 million bales) in the corresponding month a year earlier but higher than 207,028 tons (950,900 bales) in August 2011.
Cotton mill use in China, the worldΆs largest spinner, remained projected in September at 36 million bales by USDA, equal to last seasonΆs consumption and the lowest in a decade.
China has replaced some of its spinning with imported yarn as a result of the government maintaining for 2013-14 a high domestic price floor, keeping domestic prices above world values for raw cotton.
Data available for the last three seasons indicate that cotton yarn imports by China have grown considerably, according to USDA. In 2012-13, ChinaΆs cotton yarn imports reached an equivalent of nearly 8.3 million bales of raw cotton, up 3 million-bale-equivalents from 2011-12 and more than double the amount imported in 2010-11.
The largest yarn suppliers to China during that period included Pakistan, India and Vietnam. Combined, those three countries accounted for 72% of ChinaΆs cotton imports during the past two seasons.
As beneficiaries of ChinaΆs demand for yarn imports, India and Pakistan have seen their consumption rise in recent years. Current USDA projections are a record 23 million bales in India and 11.7 million bales in Pakistan, near its record of 12 million in both 2006-07 and 2007-08.
Although Vietnam is a relatively small consumer of cotton, mill use there has grown significantly to a projected 2.5 million bales in 2013-14, up from only 1.6 million bales just three years ago.
Futures open interest gained 948 lots Monday to 174,373, with DecemberΆs down 817 lots to 117,943 and MarchΆs up 1,722 lots to 43,435. Certificated stocks declined 527 bales to 15,144. No cotton awaited review.
World values as measured by the Cotlook A Index fell 35 points Tuesday morning to 89.95 cents. The premium to MondayΆs December futures settlement widened 11 points to 5.95 cents.
