The World and United States Cotton Outlook
•Imports of U.S. cotton face addi-
tional 25% duty; some imports by
State Enterprises and for process-
ing exempt from additional duties.
On Feb. 17, 2020 China announced
procedures for other importers to
apply for exemptions from the ad-
ditional duties.•Xinjiang subsidy level based on dif-
ference between target price and
average price received by gins dur-
ing ginning period.
•For inland farmers, subsidy equals
lesser of 2,000 RMB/MT or 60 per-
cent of Xinjiang target price pay-
ments in given year.
•Imports of foreign cotton by State
Reserve.•
•Additional access provided; addi-
tional Sliding Scale quota likely.Further shift to payments being
linked to production rather than
area. Xinjiang yearly (2017-19) vol-
ume entitled for subsidy capped at
85 percent of 2012-14 average
China cotton production. Some re-
gions in Xinjiang have set ceilings
on seedcotton yield that can be at-
tributed to individual farmers, limit-
ing ability of production from unreg-
istered land to receive subsidy pay-
ments.State Reserve Policy:
2018
•Sales from March 12 thru Septem-
ber 30, 2018.
•Daily offers of 30,000 MT, 2.49 mil-
lion MT sold, 58 percent of total
amount offered. Offer price based
on weekly average of internal price
and A Index (same as 2016 and
2017).
•Purchased 100,000-120,000 MT for-
eign cotton.•
2020/21
•
2019
•Sales from May 5 thru September
30, 2019.
•Daily offers of 30,000 MT, 998,500
MT sold, 91 percent of total amount
offered. Offer price based on weekly
average of internal price and A In-
dex (same as 2016, 2017, and
2018).
•Purchased 200,000-225,000 MT for-
eign & 35,000 MT domestic cotton.
2020
•Sale of remaining 2012 and 2013
stocks.
•Additional purchases of foreign cot-
ton and of domestic new crop (up
to 400,000 tons of 2019 domestic
crop).
•Stock level at end of year roughly
equal to that at beginning of the year.
Domestic Support Policy: Target
Price Policy 2016/17 - 2019/20
•Target price of 18,600 renminbi
(RMB)/MT for Xinjiang.Subsidy for long staple cotton at
1.3 times base rate.
No formal announcement yet, no
major changes expected (rumors
say likely to moderately increase
subsidy to farmers in inland prov-
inces).
Other Support for Cotton
•High quality planting seeds sub-
sidy.
•Xinjiang transport subsidy: Subsi-
dies are provided to transport cot-
ton lint and cotton containing yarn
from Xinjiang to other regions.
•Government support for spinning in
Xinjiang: Government provides di-
rect support for spinning and for in-
vestment in spinning capacity in
Xinjiang.
About U.S. Farm Bill
On December 20, 2018, the Agricul-
ture Improvement Act of 2018 became
law and will be in place for the crop
years 2019 through 2023. In general,
many of the provisions of the 2014
Farm Bill such as Marketing Assis-
tance Loans and the ARC/PLC pro-
grams were retained, with some up-
ward adjustments to loan rates for
NCM-MARCH 2020
32some crops and an allowance for ARC/
PLC reference prices to rise as much
as 15% above the statutory reference
prices. Also, producers were required
to allocate “generic” base acres (former
cotton base acres before 2014) to seed
cotton base acres in an amount equal
to the greater of 80% of their generic
base acres (up to 100% in some
cases), or the average number of seed
cotton acres planted on the farm dur-
ing 2009-12, not to exceed total ge-
neric base acres on the farm.
For cotton, most of the Title I provi-
sions are unchanged or modestly ad-
justed from the 2014 Farm Bill, with
the noteworthy exception of incorpo-
rating the “seed cotton” (unginned cot-
ton containing both lint and seed) ARC/
PLC provisions from the Bipartisan
Budget Act of 2018 (signed February
9, 2018), which made seed cotton eli-
gible for ARC/PLC for the 2018/19 crop.
This was after cotton lint was removed
as a “covered” commodity in the 2014
Farm Bill following a successful WTO
challenge of the U.S. cotton program
by Brazil. The upland cotton market-
ing assistance loan rate remains be-
tween 45 and 52 cents/lb., the ELS rate
was raised from $0.7977/lb. to $0.95/
lb., and seed cotton loan rates corre-
spond with their respective upland and
ELS loan rates. The Economic Adjust-
ment Assistance Program for domes-
tic users of upland cotton (“EAAP”) is
unchanged. The Extra Long Staple
(ELS) Competitiveness payment pro-
gram remains in place but several pa-
rameters potentially affecting pay-
ments have been changed.
Seed Cotton ARC/PLC Provisions
When cotton lint was removed as a
covered crop in the 2014 Farm Bill,
cotton base acres were eliminated and
were replaced by “generic” base acres.
With no cotton base acres, no pay-
ments could be made under ARC/PLC
based on cotton lint prices or revenues,
as could be made to owners of other
covered crop base acres. Instead, ge-
neric base acres, on an annual basis,
could be eligible for payments based