2019 Review: Cotton Price Decline; 85% China Cotton from Xinjiang

Source:China Cotton Association  Date: 09/January/2020

During the year of 2019, the reserve cotton processed smoothly, import cotton increased and cotton production declined slightly. Cotton price witnessed significant decrease with abundant supply and reduced demand affected by uncertainties from foreign market.

1.Cotton price slumped, price gap home and abroad vibrated

Since May, the repeated trade friction between China and U.S. caused decline for cotton spot and futures. In 3rd October, CC Index 3128B reached its annual lowest of 12,598 Yuan/ton, 2,771 Yuan lower than the beginning of the year. Later the price recovered slightly to 13,369 Yuan/ton by 31st December, thanks to reserve purchase and positive news from China and U.S. trade negotiations. The annual average price is 14,212 Yuan/ton, 10.5% less than last year. During the same time period, international market price also vibrated largely with average price of 77.83 cent/lb. for Cotlook A, 14.85% down over the year, and the average price gap home and abroad is 1,020 Yuan, with the largest gap of 2,744 Yuan and the smallest of 0.19 Yuan.

2.Seed cotton buying price and quality decreased

The seed cotton purchase moves fast while the quality declined. National average buying price for 3128 grade seed cotton is 5.56 Yuan/kilogram, 18% less than the corresponding time last year. As for different regions, Xinjiang seed cotton price is 5.47 Yuan/kilogram, 19.1% down, while inland cotton is 5.91 Yuan/kilogram, 14.5% less.

The cotton inspection statistics showed that the new arrival quality declined. By 31st December, 84.9% was grade 3 white cotton nationwide, 6.7% less than last year; that with length of 29mm took 55.3%, 6.01% less; Micronaire A and B took 82.92%, 3.68% less.

3.Reserve cotton transaction

The 2019 reserve cotton auction totaled 996,000 tons from 5th May to 30th September, 60.3% less than last year, the transaction rate was 85.7%, 27.6% higher than last year.

The purchase of reserve cotton started from 2nd December. By 3rd January, the transaction was 37,000 tons, at rate of 22.02%, at the lowest price of 12,879 Yuan/ton, and the highest price 13,522 Yuan/ton.

4.Cotton production accumulated to Xinjiang

According to National Bureau of Statistics, the national cotton production of 2019 is 5.89 million tons, 3.5% less than 2018. Xinjiang cotton production takes 84.9% of the national total, 1.2% over the year. The national cotton acreage reduced slightly to 50.08 million mu (333.9 hectares), 0.5% less than last year. As for different regions, cotton acreage in Xinjiang increased by 2% to 76.1% nationally, 1.8% higher than that number of last year. The cotton target price subsidy policy aims at Xinjiang encouraged cotton production there, while at the same time cotton acreage declined than 2018 due to profit decline and agriculture structure adjustment.

5.More cotton import

In 2019, cotton import quotas management is improved to encourage cotton import. According to Customs, the first 11 months of 2019 imported 1.69 million tons foreign cotton, 25.2% more than the same time period last year. Affected by duty increase from U.S., import cotton from America reduced and Brazil became the top import source country, and took the share of 25%, followed by Australia, U.S, India and Uzbekistan.

 

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