“China will still get cotton from the U.S.” possibly indirectly, he said. Mills may obtain some cargoes via Vietnam, or buy American supplies including a tariff, he said.
Cotton on Tuesday tumbled by the exchange limit on ICE Futures U.S. in New York and has slumped 12 per cent from a four-year high of 94.82 cents a pound on June 6. China has bought almost 1.5 million bales from the U.S. this season, “and traders are now concerned about the cancellation of those sales,” Louis Rose, director of research and analysis at Rose Commodity Group in Memphis, Tennessee, said in a report. A bale weighs 480 pounds or 218 kilograms.
The Cotton Association of India said last week that output this season will rise 8.3 per cent from a year earlier, boosting exports. China’s inventories have dwindled from a record in 2015 amid a decline in acreage. The government plans to issue additional import quotas because adverse weather damaged the domestic crop, and a shortfall of high-quality fibre looms.
In the U.S., cotton futures rose as much as 21 per cent this year as a drought eroded crop prospects in West Texas, the top producing region.
“We went up way too fast, and now we are coming down way too fast,” Brown said.
Futures for December delivery fell 3.95 cents, or 4.5 percent, to close at 83.82 cents a pound on Tuesday after tumbling by the limit of 4 cents.