US Cotton Exports Facing Increased Competition

The 2024/25 cotton marketing year is off to a weak start for exports, with year-to-date shipments well below seasonal averages. Much of the decline has been driven by lower exports to China, with shipments to Pakistan and Vietnam unable to offset the declines. Global economic worries are an easy scapegoat for lower Chinese imports. However, available supplies from other countries are the driving force behind lower U.S. exports.

1. China's cotton imports off to a strong start

For the first nine months of the calendar year, China's cotton imports reached 2.28 million bales, more than double January-September volumes in 2023. Monthly imports dipped to average levels in two out of the nine months (June and September). The country’s imports are at the fastest pace since the 2014 calendar year. 

At the beginning of the 2010s, China began importing record amounts of cotton due to historically low stockpiles. China turned to the U.S. and Australia amid an Indian ban on exports. The country’s purchasing campaign led to surging inventories, which remained elevated from the early to mid-2000s.

2. China Ramps up Imports from Brazil

China imported record volumes of cotton from Brazil in 2023/24 due to higher production and lower prices. That led to Brazil overtaking the U.S. as the No. 1 exporter as the South American country boosts its competitiveness in global crop markets. Higher imports from Brazil limited U.S. exports as domestic supplies recovered from poor production. The USDA forecasts Brazil to reach another record during the current growing season.

In 2023, China slowly began lifting export restrictions on Australian cotton imports after mills were told to stop buying Australian cotton in 2020 due to diplomatic changes. Despite lower China demand, Australian exports are expected to remain relatively strong following a solid third quarter. Challenging Australian shipments are dwindling stockpiles due to increased trade to China, Vietnam, Indonesia, and Bangladesh.

3. U.S. Cotton Exports to Decline

The USDA forecasts U.S. cotton exports at 11.50 million bales for 2024/25, down 2 percent from the previous season and a nine-year low. Data shows that the U.S. has shipped about 1.5 million bales, 13 percent of the USDA’s target, the slowest pace since the 2017/18 season. Part of that decline has been due to lower production after adverse weather conditions impacted growing areas. But competition from Australia and Brazil also played a role.

In early 2024, U.S. cotton prices traded at contract highs, leading to lower export sales to China. Brazilian cotton prices are comparatively cheaper. If China can go to other countries instead of the U.S., it will.

U.S. exporters will have to rely on trade with other countries, such as Pakistan and Vietnam, where 2024/25 exports are up 77 percent and 60 percent, respectively

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