The Intention to Plant Cotton Continues to Decline and the Demand for Cotton Remains Stable - Monthly Report (April)

Source:China Cotton Association  Date: 17/May/2018

~In April, the nation's cotton planting began, and the willingness to plant cotton decreased again. The planting progress was faster than that of the same period last year. According to CCA, the estimated cotton planting area in 2018 is 7.03 million acres, a decrease of 4.43 %, and a 0.48 percentage point increase over the previous period. Reserve cotton was put in to meet the demand of textile enterprises, the spot price of cotton dropped slightly while the enterprises bid on demand, and the transaction rate dropped. China's textile exports recovered, production and sales were basically stable, and raw material inventories recovered slightly. The cost for enterprises to use reserve cotton is reduced, and the price advantage of domestic pure cotton yarn is maintained.

(1) The National Cotton Planting Intention declined and the Planting Progress was faster than Last Year

Since spring sowing, the weather conditions are generally suitable for cotton seeding. The progress of spring sowing is faster than last year, some cotton areas have entered the seedling stage. As of April 30, the national cotton planting progress was 88.95%, an increase of 3.55% year on year. Seedling raising and seeding progress was 97.69%, slightly faster than the same period last year by 0.1%. With the acceleration of spring sowing and the gradual determination of cotton planting area, according to the forecast by the CCA, the decrease of cotton planting intention in the whole country has expanded again, among which: the cotton planting area in Xinjiang is 4.85 million acres, a slightly increase of 0.47% year on year, which is basically the same as the previous forecast; The area of cotton planting in the Yellow River Basin was 1 million acres, a decrease of 11.43% compared with the previous forecast, and a decrease of 0.14% larger than the previous forecast. The area of cotton planting in the Yangtze River Basin was 1.05 million acres, a decrease of 14.80% compared with the previous forecast, and a decrease of 0.88% larger than the previous forecast.

(2) The Turnover Rate of Reserve Cotton dropped

The supply of reserve cotton continued. Due to the decrease in the proportion of Xinjiang cotton, the supply transaction rate and the transaction price decreased month on month. A total of 600,200 tons of listed resources were traded, with a turnover of 278,100 tons, a turnover rate of 46.35%, decreased 15.8% than previous month. Among them, Xinjiang cotton output dropped by 38,600 tons, which accounted for 56.56 % of the total turnover. The amount of cotton released from the inland was 442,900 tons, with 120,800 tons traded, with a turnover rate of 27.27%, accounted for 43.44 % of the total. Xinjiang cotton is still popular with enterprises. The average transaction price of cotton reserves for the whole month was 14,228 Yuan / ton, down 132 Yuan from the previous month, 3128’s price was 15,518 Yuan / ton, which was the same as the previous month.

As of April 28, the cumulative turnover of reserve cotton was 557,700 tons, with a turnover rate of 53.1 %. Among them, the cumulative turnover of Xinjiang cotton was 353, 200 tons, with a turnover rate of 99.9 %. The inland cotton transaction was 204,500 tons, with a transaction rate of 29.4%. The highest transaction price is 16,310 Yuan / ton and the lowest price is 12,700 Yuan / ton.

(3) Textile Production and Sales have Basically Stabilized and Exports have Rebounded Sharply

Since March, textile production and sales have resumed rapidly and remained stable in April, with most textile enterprises operating normally, cotton demand and enterprise profits stable, and finished yarn and gray cloth inventories continuing to decline. According to a survey conducted by the CCA, yarn production fell by 1.37% from the previous month, and decreased by 2.23% from the previous year. The cloth production has decreased by 2.32% month on month, and down 0.08% year on year. The yarn sales rate was 88.78%, down 1.34% from last month. At the end of the month, the yarn inventory of textile enterprises was 22.18 days, down 2.07 days from the previous month. Gray cloth inventory was 23.89 days, 2.65 days less than last month.

The price advantage of domestic pure cotton yarn in April is still maintained, 127 Yuan/ton lower than imported yarn, but the price difference between inner and outer yarn has narrowed.

According to Customs’ data, China's textile and clothing exports rebounded sharply in April, with China's textile and clothing exports about USD 21.486 billion, down 0.58 % year on year and up 51.69 % month on month.

(4) The National Cotton Commercial Inventory Decline

Due to abundant supply in the spot market and enterprises purchasing on demand, commercial inventory continued to drop sharply at the end of the month. According to CCA, at the end of April, the country's total commercial cotton inventory was about 2.87 million tons, a decrease of 361,200 tons, dropped 11.2 % from last month. Among them: Xinjiang cotton stock was 1.94 million tons, down 393,700 tons month on month. The inventory of warehouses in the inland was 801,400 tons, down 9,000 tons from the previous month. The total amount of cotton imported from bonded area warehouses was 126,500 tons, up 41,500 tons month on month.

(5) The Price Difference between Domestic and Foreign Cotton has Narrowed Slightly in the Stable Domestic Cotton Price

In April, there were abundant resources available in the market and textile enterprises were running well. However, China's continuous monetary tightening policy since this year has led to a relative shortage of funds for enterprises and a slight decline in spot prices. During the same period, the international cotton market remained volatile, with the spot price moving up and the spot price difference between domestic and foreign cotton narrowing. China Cotton Price Index (CC Index 3128 B) averaged 15,488 Yuan/ton per month, down 189 Yuan from the previous month and 384 Yuan/ton from the previous year. China's imported cotton price index fc index m was 91.99 cents per pound per month, down 0.47 cents per pound from the previous month, up 4.05 cents per pound from the previous year, with a 1% tariff discount of RMB 14,613 Yuan per ton, lower than the domestic spot price of 875 Yuan, and the price difference narrowed 128 Yuan from the previous month.

 

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China Cotton Index (CC Index)
2018-12-14
  • CCindex (3128B) : 15411 6
  • CCindex (2227B) : 14455 12
  • CCindex (2129B) : 15912 17
Foreign Cotton Index (FC Index)
2018-12-13
  • FC index S: 92.52 0.00
  • FC index M: 88.71 0.00
  • FC index L: 85.89 0.00
Monthly Date
  • Cotton Import 1-2018 13.4(10 thousand ton)
  • Yarn Output 10-2018 284(10 thousand ton)
  • Textile Export 11-2018 230.5(100 million USD)
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