Integration Of Cotton Industry May Help Us Expand Cotton Exports
China's cotton production and processing industry is accelerating integration because of the shrinking demand growth, which may provide more opportunities for us export business in the long run.
Analysts say the credit crisis has stimulated the US economic downturn and strangled the export of US cotton to China, and China is the world's largest cotton importing country. But in 2009, China's cotton planting area is expected to decrease, and the Chinese textile industry will digest the cotton stocks of the United States. "It depends on how fast we get rid of the economic crisis," said Ryan Maltsbarger, an analyst with global analyst at Columbia analysis and forecasting agency.
The US Department of Agriculture reports that in September, China's cotton imports decreased by 45% to 129000 tons a year. From January to September, China's cotton imports decreased by 6.7% to 1 million 770 thousand tons. From January 2008 to September, the United States exported 782401 (480 pounds) of cotton to China, less than 1 million 29 thousand bales in the same period last year.
Growers and producers all over the world are staying away from cotton because farmers have higher returns on planting grain and lower production costs of chemical fiber fabrics. However, industry experts say that the next 3-4 years will be a critical period for the integration of the United States and China's cotton industry. Like the United States, China is reducing cotton production. China is trying to find a comfortable output to avoid overproduction.
China has reached an unanimous decision to expand grain production, and the importance of Chinese consumption is greater than that of wear. In the 2009-10 farming year, the East China region may reduce 10% of the cotton planting area, and the western region will reduce the cotton field by 5%. In the end, the United States may become a real beneficiary. In the next few years, although the US output will decrease, the proportion of US exports will not drop. The United States will produce 13 million 700 thousand bales of cotton and 13 million bales of cotton in 2008-09.
In the 2009-10 year, the cotton planting area in the United States will also be reduced by 10% compared with 9 million 410 thousand acres in 2008. The US Department of agriculture will give the first estimate of cotton acreage in 2009 in March, but non official agencies will release the forecast by the end of the year or early.
The world economic crisis is chopping up global cotton consumption, and consumers' money in their pockets is evaporating. They must reduce textile consumption. 2008-09 world cotton consumption is expected to be 122 million 310 thousand packs, down from 123 million 700 thousand packages in 2007-08. Although the world's cotton prices are very low, Chinese textile mills have limited capital and credit. In October, China began to buy Cotton in main cotton producing areas, which was higher than the market price, aiming to ensure the supply of goods and raise the income of farmers. The government guarantee that the 2009-10 market year will substantially increase subsidies for cotton farmers.
Analysts say China is trying to ensure textile exports because they fully understand what is happening in the US and European export markets.
In 2009, as in 2008, cotton procurement will still be used now (no overnight food), and China's cotton consumption will not expand or decrease. The US Department of agriculture estimated that China's cotton consumption in 2008-09 was 52 million 750 thousand bales.
India is the second largest cotton producing country in the world. For Chinese textile mills, India cotton is cheaper because of its proximity, but India consumes most of its own cotton. American cotton is of high quality, less pollution and less impurities. Because China textile mills must improve the value of textiles, American cotton is the cotton that Chinese textile factories need.
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