The spread of the latest coronavirus and its possible effects has reduced the intake of China, more than consolation for the future positive impacts of the trade agreement between the United States and China. China’s intake is modestly reduced on the basis, in part, of the initial outbreak effects of Covid, including prolonged plant shutdowns due to the Lunar Holiday extension. Current effects include slowing across the textile sector as travel limits, plant shutdowns and slowing down market demand for apparel and other goods have reduced the business activity. The uncertain period and extent of these effects overshadows trends in consumption in 2019/20 after last month’s estimate.
Instead, the recent trade deal signed between the U.S. and China has minimized uncertainty by replacing, at least on a short term, the possibility of increasing trade (which has an adverse effect on the cotton sector) with a greater potential to mitigate trade measures implemented during the conflict. The agreement has a positive effect on projected CY 2020 revenue growth and global cotton consumption by raising uncertainty. Remember that China’s recent reduction in some of its retaliatory duties did not help the cotton sector in particular.