A Rise in Demand and Price - Monthly Report ( May )

Source:China Cotton Association  Date: 23/June/2018

In May, the national cotton planting was basically completed, the weather conditions in all cotton areas were suitable for cotton growth, and the planting progress was basically the same as last year. According to CCA, the total cotton planting area in 2018 is expected to be 7.03 million acres, down 4.43 % year on year, the same as the previous period. Domestic cotton prices rose and the turnover rate of reserve cotton rose. Textile production and sales remained stable, business efficiency improved, and cotton demand increased steadily. CCA predicted cotton consumption of 8.55 million tons in 2017 / 18, an increase of 120,000 tons over the previous period. Commercial inventory is sufficient, although it dropped slightly from the previous month, it is still higher than that of the same period last year. Influenced by various factors such as Sino-US trade friction, international cotton prices rose as a whole, but the increase was smaller than domestic cotton prices, and the price difference between domestic and foreign cotton kept within the level of 1,000 Yuan.

(1 ) Cotton Seeding Completed, Cotton Planting Area Remained Stable

According to the forecast by CCA, the cotton planting area in 2018 will remain basically stable, of which Xinjiang will have an area of 4.85 million acres, increased 0.5 % year on year. The inland showed a downward trend. The area of the Yellow River Basin was 1.03 million acres, a decrease of 11.4 % compared with the last year, and in the Yangtze River Basin was 1.05 million acres, a decrease of 14.8 % compared with the last year. Since sowing, some cotton regions have suffered meteorological disasters, but the difference is not significant compared with previous years, and the occurrence time is earlier and the impact on the overall yield is limited. As of May 31, the reseeding has been completed.

( 2 ) An Increased in Both Reserve Cotton Transaction Price, and Transaction Rate

Due to the rapid increase in cotton prices, the spot sales progress is slow, and the transaction rate of reserved cotton continues to increase. During the month, 535,600 tons of reserve cotton was sold, with a turnover rate of 81.13 %, up 34.78% from the previous month. Monthly transaction price 14,929 Yuan/ton, 701 Yuan/ton higher than last month; The price of 3128 is 16,400 Yuan/ton, 882 Yuan/ton higher than last month. As of May 31, the cumulative turnover of reserve cotton was 1.093 million tons, with a turnover rate of 63.91 %.

( 3 ) Textile Production and Sales Have Been Steady, While Export Growth Has Remained Stable

Textile production and sales maintained an increasing trend, and cotton yarn prices continued to recover under the impetus of the increase in raw material prices. However, due to the lower cost of purchasing raw materials in the early stage, the business efficiency of the enterprise increased and the cotton consumption increased steadily. According to CCA, yarn production rose by 2 % in May from the previous month and 0.78 % from the previous year. Cloth production increased by 1.08 % month on month, basically flat year on year. The yarn sales rate was 91.22 %, up 2.4 % from last month. The price of domestic pure cotton yarn rose, while the price advantage of imported cotton yarn increased slightly. At the end of the month, the price of imported yarn was lower than that of domestic yarn 71 Yuan/ton.

According to Customs data, China's textile and clothing exports remained basically stable, with total textile and clothing exports reaching USD 23.44 billion in May, including USD 11.24 billion in textile exports, up 8 % from a year earlier, and USD 12.2 billion in clothing exports, down 6.2 %.

( 4 ) The National Cotton Commercial Inventory Increased Year-On-Year

Due to the rapid increase in cotton prices, enterprises have increased their efforts to purchase raw materials, but the spot sales progress is slow, resulting in a significant increase in inventory. Statistics from the CCA show that at the end of May, the total amount of cotton commercial inventory nationwide was about 2.55 million tons, up 68.1 % year on year and down 319,900 tons month on month, down 11.1 %. Among them, Xinjiang's cotton stock was 1.56 million tons, a decrease of 380,600 tons from the previous month, and an increase of 988 million tons from the previous year. The inventory of warehouses in the mainland was 854,900 tons, an increase of 53,500 tons from the previous month, an increase of 66,000 tons from the previous year. The total amount of imported cotton from bonded area warehouses was 137,700 tons, an increase of 7200 tons from the previous month, an increase of 61,000 tons from the previous year.

( 5 ) The price difference between domestic and foreign cotton prices has slightly widened

In mid-May, without any obvious change in market supply and demand, the price of cotton rose sharply and the transaction rate of reserve cotton increased, with the transaction rate of 100% in several days, resulting in tension in the market. Zhengzhou Cotton Futures Market continued to rise sharply, driving up spot prices. As of May 31, China Cotton Price Index (CC Index 3128B) was 16,611 Yuan/ton, up 1,158 Yuan/ton from the previous month. The monthly average price was 15,768 Yuan/ton, up 280 yuan month on month, down 264 Yuan/ton year on year.

On the international front, due to various factors such as Sino-US trade friction, international cotton prices rose as a whole, but the increase was smaller than that in China, and the price difference widened slightly. China's Foreign Cotton Price Index (FC Index M) was 95.32 cents per pound per month, up 3.33 cents per pound from the previous month, up 7.66 cents/pound from the previous year, with a 1 % tariff discount of 14883.5 Yuan/ton, down from 885 Yuan/ton in domestic stock in the same period, expanding 10 Yuan/ton from the end of the previous month.

In order to cope with the abnormal price fluctuations, maintain the stability of the market and guarantee the cotton needs of textile enterprises, the national cotton trading market and the China Cotton Storage Company issued a public announcement. Starting from June 4, the cotton storage round-trip trading is limited to the participation of cotton textile enterprises, and is limited to their own use and not for resale. The National Development and Reform Commission (NDRC) announced on June 14 that it will issue a quota of 800,000 tons of cotton imports to sliding duties this year, all of which are non-state-owned trade quotas. For this reason, China's cotton import volume increased by 2017/18 degrees in the balance sheet of supply and demand is 1.252 million tons, an increase of 200,000 tons over the previous period.



 

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China Cotton Index (CC Index)
2018-10-19
  • CCindex (3128B) : 15898 -15
  • CCindex (2227B) : 14889 -13
  • CCindex (2129B) : 16599 -26
Foreign Cotton Index (FC Index)
2018-10-19
  • FC index S: 92.95 0.00
  • FC index M: 89.01 0.00
  • FC index L: 87.23 0.00
Monthly Date
  • Cotton Import 1-2018 13.4(10 thousand ton)
  • Yarn Output 8-2018 277.2(10 thousand ton)
  • Textile Export 9-2018 266.1(100 million USD)
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