World cotton carryover is projected to increase by 11 million bales to a whopping 80 million. China has the lion's share of that with 46 million bales.
Nevertheless, Dr. O.A. Cleveland, Mississippi State University cotton marketing economist emeritus, told the 2013 Beltwide Cotton Conferences on Wednesday that China certainly is not likely to waste their cotton.
"China has too much invested to dump their cotton," the renowned cotton economist said.
Of the cotton China now has in its total inventory, Cleveland noted the Chinese government bought 25 million bales of its supply from Chinese farmers. China paid its cotton growers $1.47 to $1.48 per pound for their cotton. That's a hefty price to pay, he noted of China's government action to firmly support its cotton growers. That is not something the Chinese government is doing for its soybean or grain producers.
"China has a tremendous amount of their money in cotton, are they really willing to lose it?" Cleveland pondered.
Cleveland told growers gathered from across the Cotton Belt in San Antonio that it is important to watch new leadership that is evolving in China and their growing attention to consumers. Expect increased spinning capability in China at more new locations, he said.
The cotton marketing veteran said that eventually the Chinese have got to release the cotton they are holding in order to get their cotton spun into textile items. In fact, Cleveland noted China already has had to import large amounts of cotton yarn from both Pakistan and India, and even small amounts of yarn from the United States.
Meanwhile, Cleveland expects U.S. cotton exports to increase by at least 200,000 bales and jump by as much as 400,000 bales than earlier projections. He said U.S. cotton carryover should be about 5.4 million bales.
Cleveland said he expects December cotton futures eventually will reach 80 to 82 cents per pound.
He said he doesn't expect the recent 9-month Extension of the 2008 Farm Bill through September 30 to have any impact whatsoever on the market price of cotton.
Cleveland urged all the cotton growers to listen to what the market tells them.
"The market is always right. We that think we are smarter than the market are always wrong."