China And The United States Sign The First Stage Economic And Trade Agreement. How Much Cotton Can China Import In 2020?

Local time on January 15th (16 hours in Beijing time), after the joint efforts of the Sino US economic and trade team, on the basis of equality and mutual respect, China and the United States formally signed the first stage economic and trade agreement in Washington, D.C.


Specific to agricultural products, the amount of China's purchase and import from the United States in China in 2020 should be no less than US $12 billion 500 million over the 2017 benchmark (about US $240 billion 100 million). In 2021, it is no less than US $19 billion 500 million higher than the benchmark in 2017 (not 16 billion dollars a year before rumours).


Judging from the calculations of some institutions, investment banks and importers, considering that there are obvious advantages in the large number of soybeans listed in South America, and the price has obvious advantages (the first batch of tariffs added between China and the United States has not been abolished, and the US tax rate is still 33%), and the Sino US agreement does not contain details of the purchase of specific beans. Therefore, it is estimated that the import growth of soybeans in China will be limited in 2020, so the pressure of import growth will be borne by cotton, grain, wheat, frozen fish and corn.


Statistically speaking, in 2017, China imported about 510 thousand tons of cotton in the United States, accounting for 44.16% of the total cotton imports in the year, accounting for 4.1% of the total imports of agricultural products in the United States in 2017 (accounting for 57.9% of the total). Taking into account that the total output of cotton in Xinjiang in the year of 2017 has been flat or slightly lower than that of the previous year, its quality and grade are not satisfactory; the state cotton stocks have dropped to the warning line and the cotton quality is difficult to meet the spinning needs, and the US and China have signed the first stage trade agreement and the global cotton consumption will gradually enter the recovery track. Therefore, the total import volume of cotton in 2020 is expected to burst 2 million tons (2019 1 million 695 thousand and 600 months in 2019, China's imports of cotton 1 million 695 thousand and 600 tons, an increase of 25.23% over the same period last year, and the import volume of the whole year is expected to exceed 1 million 800 thousand tons).


Cotton not only has a sharp decline in output and quality, but also has a high price, so Australia cotton and China's imports are increasingly far away (2020 output is not optimistic). Brazil cotton production has increased sharply, but prices have come back to the top. It has achieved "bend overtaking" for us cotton and West African cotton, plus its own domestic acquisition, transportation (including highways, shipping dates) and storage capacity and so on. Therefore, the growth potential of China's exports is not too large (and we need to consider the procurement competition of Vietnam, Bangladesh and Indonesia). Therefore, the author estimates that the import of American cotton products will increase to 80-90 tons in 2020, which will exceed 40% tons of China's imports. Due to 2019 Australia According to statistics, up to now, China has signed about 430 thousand tons of cotton in 2019/20 and 2020/21, so it is necessary to import 40-50 tons to solve the problem.


What are the factors that restrict China's signing of US cotton at present? The author summarizes the following points: first, the 25% tariff imposed on China's import of US cotton has not yet been abolished, and the competitiveness of domestic cotton in the United States needs to be improved. When will the US cotton tariff be abolished? The implementation of the first phase agreement between China and the United States, sincerity and sufficient respect for the implementation of tariff reduction for China's imports will naturally correspond to the "release" of the US cotton imports. Two, due to the influence of many factors such as the quality of the US cotton, the price performance ratio and the trend of the US dollar, it is difficult to reach the first stage agreement between China and the textile industry and traders. Therefore, it is difficult for the relevant departments to cooperate in the import policy. The three is that the importers are more worried about the implementation of the first stage trade agreement between China and the United States and the two stage and third stage negotiation process of the two stage. They are afraid that the US will go back and forth and lead the previous agreement to "push back and talk again". Therefore, signing the purchase of cotton and cotton in the 2019 and 2020 year can not be "let go" and treat it with caution. China is waiting for the US side.