China March Cotton Imports Drop 14.6% Amid Lower Yarn Prices.

Cotton imports by China, the biggest buyer, fell 14.6 percent in March from a year ago, as lower yarn prices cut into profits for the textile industry, reducing demand.

Inbound shipments were 276,436 metric tons, compared with 323,780 tons a year earlier and 180,000 tons in February, General Administration of Customs data showed today.

Cotton reached a record last month before tumbling into a bear market on speculation that global output, including in the U.S. and India, is set to increase. Plantings in some areas have fallen as record prices failed to spur increased acreage, China’s top economic planning agency said this week.

“The textile mills’ profits have declined quickly along with yarn prices, so they’ve become a bit short of cash,” Dong Shuzhi, manager at Shanghai Jinhuicheng International Trade Co., said today.

The average local textile mills’ profit margin dropped to 169 yuan ($25.90) a ton in April, from 1,360 yuan a month earlier, according to a recent survey by Jinhuicheng. About 70 percent of the textile mills surveyed said they remained pessimistic about the outlook of the market, it said.

Cotton on ICE Futures U.S. in New York reached an all-time high of $2.1970 per pound on March 7. The July-delivery contract dropped 0.6 percent to to $1.66 today, bringing the fall since the record to 24 percent. A slump of 20 percent or more signifies a bear market to some investors.

About 55 percent of China’s cotton imports in March were from the U.S., followed by India and Uzbekistan, at 31 percent and 7 percent, respectively, the China Cotton Association said in an earlier statement.

Source : bloomberg.com