In the short term, Cleveland says, China has 50 million to 60 million bales of cotton stocks that are overhanging the world market.

But, he says, “Those stocks are at least two years old, and most of the cotton is three or four years old, so other than using it to make cheap yarns, they have no choice except to import higher quality cotton to mix with their cotton in order to spin quality yarns.

“China has increasingly moved toward producing quality yarns, and their textile mills are wanting quality cotton. That’s why we’ve been selling so much U.S. cotton.”

Cleveland says the USDA’s World Agricultural Outlook Board has “grossly underestimated Chinese cotton demand the last five years — that’s documented — and in my opinion, they’ve grossly underestimated it again. Three years ago, China imported 20 million bales, two years ago they imported 14 million bales, last year they imported 12 million bales. But the WAOB has China importing only 8.5 million bales of 2014 crop cotton, which I believe is too low.” 

Chinese mills don’t want the cotton its government has in storage, he says. “Yes, they’re buying some of it, but they will have to continue buying U.S. cotton to maintain quality. Our exports to China are still very active.

“I would guess as the U.S. crop gets bigger, at least three of every four bales we grow will go to the export market, and rather than USDA’s export projection of 8.5 million bales, we’ll probably hit 12.5 million to 13 million bales, simply because we’re going to have a larger crop and a lower price.”

India has been on track to become the world’s largest cotton producer, Cleveland says, “but it looks like China may stay above them this year. There’s no doubt, though, that India will become the world’s largest producer — if not this year, perhaps next year.”

Concerns about India’s current crop, centered on fears their monsoon was going to be very late, is “another reason the market had gone higher, he says. “Instead, it came early, and everyone was excited that India was going to plant a lot of acres.

“Then, the monsoon disappeared. Sixty percent of the cotton acres in India aren’t getting the rains needed to make the crop. They’ve quit planting and are just sitting there watching the skies. Only about 40 percent of the crop is getting decent rains.

“India still has time to produce 28 million to 32 million 480 lb. bales,” Cleveland says. “The USDA projects them at 38.5 million. The market is kinda teetering right now with respect to India’s production outlook, but whatever cotton we may be losing in India we’re making up here in the U.S. 

“But the New York cotton futures contract is U.S. based, so right now we’re paying more attention to the U.S. crop.”