China s buying is currently hampered with the 25% tariff

China has started showing interest in buying United States cotton, based on discussions during the April 12 meeting of the Plains Cotton Growers (PCG) Advisory Group.

There have been positive signals regarding movement of U.S. cotton to China in anticipation of a trade deal between China and the United States.
“Demand for cotton is there,” stated one merchant at the meeting.

The December Futures value for the new crop (77.60 cents) is somewhat high, given the volume of cotton left to sell – about 500,000 to 750,000 bales in the U.S. While China normally wants high quality cotton, they are interested in lower grades (31 and 41 color grade) at a discounted price. A trade deal will enable these cottons to push into the Chinese market.

However, China’s buying is currently hampered with the 25% tariff, and the future buying in volumes depends on quickly finalizing a favorable trade deal.

“Everybody is hopeful that a deal can be finalized sooner to clear the way for cotton to move into China,” stated Shawn Wade, director of Policy Analysis and Research at PCG.

Cotton industry stakeholders also focused their attention on the planting season ahead. With the ginning process completed this week in the Texas High Plains, it is hoped that the region’s cotton production will cross the 4 million bales mark.

Regarding quality, this year’s average micronaire for the cotton bales classed at Lubbock USDA classing office has been 4.07 – a good number compared with last year’s average of 3.21.

Courtesy: Weekly PriceWatch Report