Chinese cotton buyers are buying Australian products in anticipation of the unofficial ban that decimated Australian cotton exports to China. Australian cotton is being shipped to a bonded warehouse in Qingdao and possibly elsewhere by The Australian subsidiary of China National Cotton Group Corporation, one of the largest state buyers of Chinese cotton, CNCGC Australia trader Tom Zheng told Reuters.

If the unofficial ban is lifted, cotton could be sold in china's lucrative domestic market, he said. Otherwise, free zone companies may use the product for re-exportation. "It's not a complete bet because there is consumption in China in free zones," Zheng said. "We hope that the relationship will improve and the ban will be lifted."

A trader who spoke on condition of anonymity said that Australian cotton has been entering China for months and that small shipments have already passed through customs. Once the largest market for Australian cotton, trade of A$900 million (US$620.28 million) was halted at the end of 2020 after China imposed a series of official and unofficial restrictions that also hit commodities such as coal and wood.

China imported 20,000 tonnes of Australian cotton in 2022, compared with 400,000 in 2019, according to Chinese customs data. But the diplomatic thaw following a meeting between President Xi Jinping and Prime Minister Anthony Albanese last November has seen trade restrictions on coal partially suspended.

Cotton Australia chief executive Adam Kay said he heard Chinese traders were entering cotton futures contracts for May. If trade remains blocked, they will transfer supplies elsewhere, he added. "We still have contact with wiring contacts in China and they would love to have access to our high quality cotton again," he said.

Source: Agrolink