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China's cotton market is witnessing record-breaking developments in MY 2024/25. With cotton production forecasted at 6.2 million metric tons (MMT), a 5% increase from the previous year, Xinjiang remains the epicenter, accounting for 94.8% of total output. However, domestic consumption estimates are slightly lowered to 8.1 MMT due to sluggish demand in textile and apparel sectors, influenced by global economic uncertainties. High stocks and robust production are set to reduce imports by nearly half compared to the previous year. Despite these challenges, the market shows potential for moderate recovery in demand, supported by competitive domestic prices and strong spinning capacity.

Key Highlights

* Record cotton yield of 2,116 kg/hectare achieved in MY 2024/25.

* Xinjiang contributes 94.8% of China’s total cotton production.

* Cotton imports forecasted to drop by 47% from the prior year.

* Domestic consumption struggles amid slow global economic recovery.

* Competitive prices boost local spinning capacity utilization.

China's cotton market has achieved a milestone in MY 2024/25 with production reaching 6.2 million metric tons (MMT), a 5% rise compared to the previous year. This growth is underpinned by record yields of 2,116 kilograms per hectare, facilitated by favorable weather and robust government subsidies, particularly in Xinjiang, which produced 94.8% of the nation's cotton. The People’s Republic of China’s (PRC) subsidy policies continue to play a critical role in stabilizing acreage and enhancing production efficiency.

Despite this impressive output, cotton prices have remained under pressure. A combination of high stocks and muted domestic demand has resulted in subdued price performance. Consumption is forecasted at 8.1 MMT, slightly lower than earlier estimates. Factors such as weak recovery in global and domestic demand for textiles and apparel, alongside increased competition from non-cotton fibers, continue to weigh on the sector.

On the trade front, cotton imports are expected to decline sharply by 47% to 1.8 MMT. The surplus in domestic production and high carryover stocks are primary reasons for this reduction. However, the domestic spinning industry stands to benefit from these developments as lower cotton prices make local production more competitive compared to imports.

While the market faces challenges, upcoming Lunar New Year festivities and government measures to stimulate consumption could foster a moderate recovery in demand. The cotton market's resilience lies in its capacity to adapt to changing dynamics, driven by a balance of production efficiency and competitive pricing.

Finally

China’s cotton market faces a complex landscape of record yields and reduced imports. Strategic policies and competitive pricing offer a foundation for future recovery, despite demand uncertainties.

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