That is more than twice as much cotton as China has bought so far this marketing season, and almost 60 percent more than USDA predicted in December. It is by far the most optimistic Chinese import prediction by a U.S. cotton analyst to date.
So far, China has bought about 5 million bales of cotton, 3.5 million of that from the U.S., Jernigan said at the Beltwide Cotton Conference in San Antonio. (Merchant William B. Dunavant Jr. predicted in his Beltwide speech that China would buy a total of 5.4 million to 6.4 million bales during the current August-July marketing year.)
It will require fiber quality above what has become the U.S. standard for U.S. cotton producers to continue to participate in booming world export market to China and elsewhere, Jernigan said, adding that the base cotton quality in the world is 1 3/32 length, not 1 1/16, the U.S. standard that is now a discounted quality worldwide.
Jernigan made his Chinese import prediction at a Bayer CropScience media breakfast.
He said China’s cotton consumption will be a record 31.5 million bales. It produced a crop of only about 21 million bales and Jernigan said the Chinese will never allow stocks to drop below 8 million bales, a three-month supply for the world’s biggest cotton consumer and producer.
Most analysts said the driver for Chinese’s insatiable need for cotton is exports of Chinese textiles to the United States.
“People keeping talking about China taking market share in the U.S. with imports as the reason for China’s imports... That is an issue. However, it is not really the driver for Chinese textile sales,” said Jernigan.
It is domestic Chinese consumption and world textile demand, particularly in Asia, he said.
Chinese domestic retail apparel consumption was up a whopping 19.76 percent in November, says Jernigan. Russia is another key market for Chinese textiles. Its gross national product is up 7 percent and this growing demand for textiles and apparel is being met by Chinese exports to Russia.
“The Indian economy is now awakening and booming. Thailand is another country where apparel demand is increasing dramatically,” he said.
Demand for apparel is accelerating faster in many of these nations faster than the U.S.
Jernigan predicts global demand for cotton this year will be a record only to be exceeded by an even larger record in 2004-05.
“This bodes well for the U.S. producer,” said Jernigan. The U.S. domestic textile industry has been in a tailspin in recent years with cotton consumption falling dramatically.
Exports have become the key to the U.S. cotton industry’s economic survival. Jernigan predicted China will import more U.S. cotton that will be used by the domestic cotton industry this season.
However, it will be producers who produce 1 3/32nd cotton or longer who will benefit from the world demand.
“During the boom days of the domestic industry, the focus was on meeting the needs of the U.S. industry and that was 1 1/16th cotton,” he noted. “At the same time, the world moved up the quality standard to 1 1/32nd. The U.S. standard is now discounted cotton.”
San Joaquin Valley Acalas and California and Arizona uplands have long met the world standard. Other areas of the belt are going to have to raise the bar to that level to compete.
It is being done where FiberMax is being produced, said Jernigan, whose company works as a consultant for the FiberMax brand.
“FiberMax cotton varieties from Bayer Crop Science have become so popular with textile mills that they are being asked for by name and gaining a premium price only 2-3 cents below SJV Acala. It is selling for 10 cents or more per pound than standard growths from areas of the U.S. Cotton Belt outside of California and Arizona.”