Monthly Report: Cotton Sowing is Basically Completed, the Demand for Raw Materials has Increased (May. 2020)

Source:China Cotton Association  Date: 17/June/2020

In May, the domestic epidemic situation continued to stabilize, the economic operation continued to recover, production demand continued to improve, and domestic cotton prices rose steadily. The international cotton price fluctuated up and down due to the continuing epidemic situation and unstable factors in Sino-US relations. By the end of May, the nationwide cotton planting was basically completed, and the conditions in the cotton area were suitable for cotton growth, and the growth was better than the same period last year. Textile foreign trade orders have rebounded, the demand for raw materials has increased, and the decline in commercial inventories has increased. The overall export value of textiles and apparel has risen rapidly, among which the gap between textiles and apparel has further widened. Textile exports continue to maintain strong growth driven by epidemic prevention materials, and the downward trend in apparel exports has not changed.

 

1. The Nationwide Planting is Basically Completed, the Growth is Better than Last Year

In May, according to CCA, the national cotton planting area was 46.156 million mu, a decrease of 4.15% year-on-year, which was the same as the previous period. During the month, most of the cotton areas in the country had normal weather conditions and were suitable for the growth of cotton seedlings. As of the May 31st, the cotton planting progress was 99.6%, lagging 0.14 % year-on-year. 50.2% of the cotton seedlings are in the 6-8 true leaf stage, an increase of 27.86 % year-on-year; the incidence of diseases and insect pests is generally lighter, accounting for more than 80%. Among the surveyed farmers, 44% think that the seedling condition is better, an increase of 29.82% year-on-year.

 

2. Fluctuations in the Price Difference between Domestic and Foreign Cotton

In May, China made solid progress in the resumption of work and production, gradually recovered the national economy, and the domestic cotton price rose steadily. The epidemic abroad has yet to be fully brought under control. China-us relations are complex and volatile, and international cotton prices fluctuate frequently. At the end of the month, CCIndex3128B reached 11,807 Yuan/ton, up 306 Yuan from the end of last month. The monthly average price was 11,644 Yuan/ton, up 248 Yuan month on month and down 3,425 Yuan year on year.

 

3. Business Inventories Fell more Sharply

In May, textile foreign trade orders rebounded, the demand for raw materials increased, and commercial inventories fell sharply from last month. At the end of the month, the national cotton commercial stocks totaled about 377.38 million tons, a decrease of 12.2% month-on-month and an increase of 6.96% year-on-year. Due to the increase in railway freight rates in Xinjiang, companies have stepped up to ship cotton before the 15th, and the shipment volume of cotton out of Xinjiang has increased significantly, the highest monthly volume since February 2015. According to statistics, the shipment volume of Xinjiang cotton professional warehouses out of Xinjiang It was 592,300 tons, an increase of 86,700 tons from the previous month, higher than the 270,400 tons in the same period last year. Affected by this, the turnover of China's commercial cotton inventory continues to increase.

 

4. Demand for Raw Materials Increased Slightly, and Textile Exports Increased Significantly

With the gradual resumption of production and production in overseas markets, foreign trade sales have improved slightly, but due to financial pressure, the operating rate of enterprises is still not high, and the output of textiles has declined. The yarn output decreased by 1.2% month-on-month and decreased by 6.8% year-on-year; the cloth output decreased by 1.2% month-on-month and decreased by 5.9% year-on-year. The operating rate of enterprises is low, raw materials are purchased on demand, and the stock of raw materials has increased slightly from the previous month. As of the end of May, the cotton stock of textile enterprises was 679,500 tons, an increase of 0.61 million tons from the end of the previous month, and a decrease of 72,100 tons year-on-year.

In May, textile exports continued to maintain strong growth driven by epidemic prevention materials. According to customs data, the textile and apparel exports were US$29.56 billion, up 26.7% year-on-year, of which textile exports were US$20.65 billion, up 79.1%; apparel exports were US$8.91 billion, down 24.5%. From January to May, the total exports of textiles and apparel were US$96.16 billion, a decrease of 1.2% year-on-year (national merchandise trade exports fell by 7.7%), a decrease of 8.8% from the previous period. Exports of textile yarn, fabrics and products were US$57.95 billion, an increase of 21.3% year-on-year , an increase of 18.4 % from the previous period, and exports of apparel and clothing accessories were US$38.21 billion, a year-on-year decrease of 22.8%, a slight increase of 0.5% from the previous period.


China Cotton Supply and Demand Balance Sheet (Jun. 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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