(Bloomberg) -- Heat waves are predicted to hit China’s top cotton-producing region of Xinjiang this month, threatening to further reduce output that is already compromised by late planting and earlier cold snaps.

High temperatures are expected in major growing areas of the northwestern region from mid-July, a key period for flowering and boll development, with the mercury climbing above 40C (104F) in some districts, according to the National Meteorological Center. The heat could cause flowers and bolls to fall, leading to a smaller crop, COFCO Futures said in a report Wednesday. 

China is the world’s biggest textile producer and one of the largest cotton importers. Any more reductions in its crop could increase concerns over domestic supplies and push China to buy more from the international market. A state-owned agency in June already predicted a 13.5% drop in production, and Beijing is planning to release cotton from its state reserves to boost supplies. 

Extreme weather has hurt agricultural production across China this year, from soybeans to rice, posing increased risks for the country’s food security. This has become an increasingly important priority for President Xi Jinping after Covid and the Russian war in Ukraine disrupted global supply chains. 

Under a government push to increase grain production, more farmers in Xinjiang were also encouraged to grow wheat rather than cotton this year. 

Crop Vulnerable

The condition of the cotton in Xinjiang, where the vast majority of the country’s crop is grown, is already weaker after a freeze and rains in April and May delayed development. That makes plants even more vulnerable to extreme weather, according to a note from Orient Futures. 

The most suitable temperature for flowering and boll development is about 25-30C, so a continuous period of much hotter weather in July would cut yields and reduce the length of the fiber, Galaxy Futures said in a note. 

Meanwhile, demand from textile producers is weak as operations are restricted by curbs on power use and low overseas orders. Consumption may pick up going forward, however, as the market enters the traditional season for peak demand in September and October, while commercial inventories of cotton and cotton yarn are not high, analysts said. 

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