Since October, in China, the gap has continued to widen between the price of domestic cotton and that imported, the former having risen sharply.

This is why the United States Department of Agriculture (USDA) estimates that Chinese cotton imports will increase sharply to reach 2 million tonnes (Mt) in 2020/21 from 1.55 Mt in 2019/20. He anticipates, in fact, a recovery in the activity of spinning mills in the face of a resurgence in the textile industries. It should, however, be remembered that these volumes in 2019/20 were down 26% compared to the previous campaign.

This hypothesis is confirmed when we note that in the first three months of the 2020/21 campaign alone, Chinese imports jumped by 56% to 560,000 t.

Chinese enthusiasm for USA cotton

It is the United States that would largely benefit from this renewed Chinese dynamism. Indeed, over the first three months of the 2020/21 campaign, Chinese cotton imports from the United States increased by 89%, with the share of North American cotton in Chinese international purchases climbing to 70% over the first two months. campaign month. In 2019/20, that share of US cotton was 31%.

This Chinese enthusiasm in recent months for American cotton is linked to Beijing's implementation of phase 1 of the US-China trade agreement (read our information: United States satisfaction with China's purchases of agricultural products Americans). To this is added, as underlined in the introduction, the rise in the price of Chinese cotton since last May. At the end of October, the ton was $243 more expensive than imported cotton.

So the strong recovery expected by the USDA from Chinese spinning mills is one of the explanations for this dynamism in imports. The other is more regulatory and relates to how China manages its TRQs. According to its obligations with the World Trade Organization (WTO), China can import 894,000 t of cotton per year at a tariff of 1% if it processes it and re-exports it. Over the past two years, China has increased its quotas applying declining rates. Thus, in October, China announced that an additional quota of 400,000 t would be distributed to non-state companies. Because if the sector has not yet fully recovered from the impact of the drop in demand in 2019/20, the gap between Chinese demand and supply for cotton should anyway be higher than the 894 000 t. And the USDA calculates: based on an estimated deficit of 2 Mt in cotton in 2020, it is very likely that Beijing will issue 1 Mt of additional quotas.

But not everything will be for the United States, warns the USDA, which points out that if the Chinese like the quality of American cotton, it is subject to an additional tax of 25% when it enters China, which reduces strongly its competitiveness against the other major suppliers of China, which were Australia, Brazil and India in the first 10 months of 2019/20.

The USDA does not mention African origins at any time.

China's deficit widens

As for China's domestic situation, the USDA forecasts production of 5.9 Mt in 2020/21, unchanged from last season, as higher yields were offset by a 3.1% drop in acreage. cotton fields. By mid-November 70% of the harvest had been completed in the south of the Xinjinag region, while it was completely completed in the north and in the other producing provinces.

Chinese demand is estimated at 8.1 Mt again according to the USDA, against 7.35 Mt in 2019/20, the sector having been heavily impacted by Covid. Stocks are expected to fall at the end of 2020/21, to 7.6 Mt against 7.9 Mt estimated at the end of 2019/20.