Posted January 17, 2018

 

By Seshadri Ramkumar

 

LUBBOCK, Texas – The U.S. cotton sector is cautiously watching China in hopes that its imports may be on the rise.

 

Addressing a gathering of about 80 people in Lubbock’s Bayer Museum of Agriculture, Dr. John Robinson, professor and extension economist at Texas A&M AgriLife Extension Service, optimistically said, “Sometime in next few years, hopes are high that China’s overall import levels may rise and may even be back to 16 million bales.”

 

This no doubt caught the attention of area wide gin representatives and cotton farmers attending the Board of Directors’ meeting of the Plains Cotton Growers (PCG), Inc.

 

The meeting opened with reports from various gins in the High Plains area. It was clear that the recent season witnessed variability between fields in terms of yield.

 

“Variability best describes the yields across our area,” said Steve Verett, producer and executive vice president of PCG. According to Shawn Wade, PCG’s director for policy analysis, “more producers have reported that their yield was less than expected.”

 

Low micronaire has been an issue this season, predominantly attributed to lack of maturity due to cold and cloudy weather in August. Commenting on this aspect, Verett said, “definitely below-average micronaire for our area and not what we strive to produce.”

 

With regard to the current market situation, demand for cotton exists. With the economy recovering slowly, consumers will start spending, so nonessential commodity buying will start to rise. Observing the recent export sales figures, Robinson stated if the exports follow the current trend, cotton exports from the United States might be above the USDA’s estimate of 14.8 million bales (480 lbs. each). He said he expects the USDA may raise its estimate by about half million bales or so. However, he cautioned about the heavy ending stock, which may affect the price.

 

A couple of reasons exist for being optimistic about enhanced imports by China in the next few years. According to Robinson, demand will be a positive influence and the need for newer stock as China’s reserves are five to six years old.

 

The market will reflect first on the increased demand from China and the farmers will follow in a year or two, like employment numbers, which is always a lagging indicator.

When the China import situation improves, it will be a game changer, said Robinson.

 

Dr. Seshadri Ramkumar, Ph.D, FTA (honorary), is a professor at the Nonwovens & Advanced Materials Laboratory at Texas Tech.