NDRC held a press conference regarding the cotton target price program on September 22nd. Mr. LIU Xiaonan, deputy director general of the Department of Economy and Trade at NDRC, stated that China would limit its 2015 cotton import quota to the 894,000 tons of TRQ only, with no additional import quotas to be issued as in previous years. He also said that in order for the new cotton to sell well, the state reserve will be holding its cotton stock back from sale from September 2014 to March 2015, unless there is a spike in demand from the market.
Mr. Liu made a prediction about the domestic supply and demand of cotton in the new crop year. China’s cotton production is anticipated to decrease 0.5 million tons from last year to 6.5 million tons, while demand for cotton to increase by 0.5 million tons to 8.5 million tons. The gap between supply and demand will be about 2 million tons, 1 million tons more than last year. Domestic cotton prices will fall, but hopefully in a reasonable range.
This change in policy will badly impact the US cotton industry.