Concerns for U.S. cotton growers going into the 2014 growing season are many. Chief among them: an abundant Chinese cotton supply on market prices, pending changes to the Chinese government’s agriculture policies, how the new U.S. farm bill will be implemented and a pending trade deal.

All were covered in-depth at the early February annual National Cotton Council meeting in Washington, D.C., where “The Economic Outlook for U.S. Cotton 2014” report was released.

The high points of the report?

“I think the biggest question right now is what China has done and what they’re going to do going forward,” said Gary Adams, NCC vice president, Economic and Policy Analysis. “They’ve certainly had the biggest impact on world markets.

China has been stockpiling cotton for the last three years. “Now, they’re indicating they will change that policy for the 2014 crop, no longer build their cotton reserves, and look to support farmers with a target price program. Depending on the level they set, it could cause their production to decline some in 2014. That’s because a target price is unlikely to be as attractive as what the farmers have received under the support program.”

The question, said Adams, “is how the Chinese will handle those stocks that they’ve accumulated. The concern for U.S. farmers is the recent reliance on China’s imports. For 2014, it’s difficult to see China continuing to import as much cotton as they have been.

“That will mean a very competitive market for the U.S., which annually exports 70 percent, or so, of its crop.”

Asked if there any indication why the Chinese have been stockpiling so much cotton, Adams pointed to several things.

“One of them goes back to 2010 when China had very little in the way of cotton stocks. Late 2010 into early 2011, cotton prices started to move much higher. It went above $2 per pound and China didn’t have the reserves to buffer their textile industry from the price run-up.

“A second consideration of the Chinese was to provide support to their cotton farmers. They decided that Chinese-produced cotton would be purchased at a high price, go straight into reserves and thus build up a buffer.”

Adams doesn’t believe the Chinese “anticipated that when the world price went below their level of support, all their cotton would be going into reserves. They are having a difficult time disposing of that cotton. I think that it’s now a larger amount of cotton than they originally anticipated.”

Does Adams anticipate that U.S. farmers may know what the Chinese plans are by planting season?

“We may have some indication by late March as to what the Chinese target price mechanism will be. I don’t know that we’ll have a lot of information about how they plan to manage their stocks for the new crop year. That continues to cause uncertainty in the markets.

“So, we may know a little bit by the time farmers decide on planting decisions. But I’m not sure the Chinese even fully know what they intend to do.”