07-Jan-2014 16:16
By Chris Prentice, christine.prentice@thomsonreuters.com
NEW ORLEANS, Jan 7 (Reuters) - China's cotton imports may drop as much as 45 percent in 2014/15 as Beijing ends its stockpiling program and starts reducing its huge inventories, said Jarral Neeper, president of Calcot, a growers cooperative and one of the largest U.S. exporters.
Imports in the world's top textile market may drop to 6-10 million 480-lb bales in the 2014/15 crop year that begins on Aug. 1 from 11 million bales this season, Neeper said during the Beltwide cotton conferences in New Orleans.
The low end of Neeper's forecast would mark the lowest import demand since 2002/03 in China, where imports have surged because of a government stockpiling program launched in 2011.
Beijing is expected to begin to shift to crop subsidies as early as this year, gutting the stockpiling program that has driven up domestic prices and put a floor under global ones.
Neeper said he expects supplies outside Beijing's reserves to rise to about 23 million bales next year from about 15 million in 2013/14.
"This is the scary part of what 2014/15 can do to us ... it's going to mean China doesn't need as many imports," Neeper said.
China will likely try prevent global prices from declining sharply and won't offload its stocks swiftly, Neeper said. Even so, "you can't get too bullish," he added.
China's industry may even export bales as supplies start to loosen. "You'll have cotton on the free market that you haven't seen in a long time," Neeper said.
The question of how Beijing will manage the overhaul has been at the forefront of discussions this week as industry members gather for the annual industry conference and farmers begin to set their 2014 planting intentions.
"It weighs very heavily," one U.S. farmer told Reuters on the sidelines of the conference.
Adding to the possibility of a drop in futures is an expected increase in output in the United States, the world's top exporter.
U.S. output may jump 25 percent to 16.4 million bales next season from 2013/14 production of 13.1 million bales, Neeper said.
That increased output forecast comes as U.S. farmers are expected to shift more acres to cotton from corn this year. (Full Story)
Meantime, supplies this season are expected to remain tight both in China, outside of the state reserves, and in the United States. That will keep futures prices in 2013/14 trading largely between 76 and 88 cents a lb, Neeper said.
Cotton prices CTc1 on ICE Futures U.S. settled at 84.67 cents a lb on Tuesday.
