Monthly Report: The Epidemic Situation in China was Effectively Controlled, and Cotton Prices Stopped Falling and Rebounded (Apr. 2020)

Source:China Cotton Association  Date: 19/May/2020

In April, the positive momentum of epidemic prevention and control in China was consolidated, and solid progress was made in the resumption of work and production. Some countries outside China also began to relax blockade measures. The orders of textile enterprises are still insufficient, the inventory of finished products continues to increase, the pressure on capital increases, the inventory of raw materials, the output of textiles are reduced, the demand for cotton is not flourishing, the decline in commercial inventory is basically the same as last month. According to CCA, in 2020, the cotton planting area in the country will decrease year-on-year, and the seeding progress will be over 90%, faster than the same period last year.

 

1. The Planting Area Decreased by 4.15% and the Seeding Progress was Faster than Last Year

Since the spring sowing, the comprehensive climate of cotton regions is suitable for cotton growth. According to CCA, the national cotton planting area in 2020 was 46.156 million mu, a decrease of 4.15% year-on-year. cotton planting area in Xinjiang is 36.655 million mu, down 0.59% year-on-year; cotton planting area in the Yellow River Basin is 4.969 million mu, down 16.04% year-on-year; cotton planting area in the Yangtze River Basin is 4.167 million mu, down 15.65% year-on-year. As of the end of April, the national cotton planting progress was 91.88%, faster than the same period last year by 2.52%; the seedling planting progress was 98.54%, an increase of 0.14% year-on-year.

 

2. Domestic and Foreign Cotton Prices Stopped Falling and Rebounded

In April, the domestic epidemic situation continued to improve, the international epidemic situation continued to spread, and the demand for cotton was weak. At the end of the month, the CCIndex3128B was 11,501 Yuan/ton, up 410 Yuan from the end of the previous month; the average monthly price was 11,396 Yuan/ton, down 798 Yuan from the previous month and down 4,263 yuan from the same period last year. China's imported cotton price index FC Index M was 65.14 cents per pound per month, down 4.2 cents from the previous month.

 

3. The Decline in Business Inventories was Flat

In April, the cotton purchasing and selling market basically recovered, but the demand was insufficient, and enterprises were cautious in purchasing. At the end of the month, the decline in commercial inventories was basically the same as previous month. At the end of April, China's commercial cotton inventory totaled about 4.297,500 tons, down 7.32% month-on-month and up 13.24% year on year. According to statistics, the outbound freight volume of Xinjiang cotton was 505,600 tons, 59,100 tons lower than that of the same month last year, and 101,000 tons higher than that of the same period last year.

 

4. Low Demand for Raw Materials, Textile and Garment Exports Decline

With the coming of the May Day holiday, the number of enterprises that stopped production and had holidays increased at the end of the month. In addition to the impact of the epidemic, the financial pressure of enterprises increased. The textile output declined month-on-month and year-on-year, and the demand for raw materials was sluggish. Yarn production fell by 2.8% month-on-month and 7.7% year-on-year; The cloth output decreased by 3.4% and 6.9% year-on-year. Affected by the shortage of foreign trade orders, enterprises basically buy raw materials along with the demand, raw material inventory continues to decline, as of April 30, the cotton inventory of textile enterprises is 673,400 tons, 40,800 tons less than the end of last month, 113,400 tons less than the same period.

According to customs data, the cumulative exports of textiles and apperal from January to April were US$66.62 billion, a year-on-year decrease of 9.97%, a decrease of 7.7% from the previous period. Exports of textile yarn, fabrics and products were US$37.31 billion, an increase of 2.9% year-on-year, compared with the previous period It rebounded by 17.5%, and the export of apparel and clothing accessories was US$29.31 billion, a year-on-year decrease of 22.3%, a slight increase of 1.7% from the previous period.


China Cotton Supply and Demand Balance Sheet(May. 2020)   Million tons

Year

Begining Stock

Production

Import

Consumption

Export

Ending Stock

2019/20

807.51

590.57

198

765

3

828.08

2018/19

802.6

611

205

807

4.1

807.51

2017/18

924.1

604.7

132.4

855

3.59

802.61


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