Monthly Report: The National Total Output Declined Slightly (Jun. 2020)

Source:China Cotton Association  Date: 20/July/2020

In June, the national weather conditions were suitable for cotton growth. According to CCA, the national cotton yield in 2020/21 is expected to increase slightly year-on-year. The main indicators returned to growth, economic operations recovered steadily, the domestic and foreign cotton prices rose. From May to early June, the textile industry recovered. After mid-to-late, the textile market entered the traditional off-season, with insufficient foreign trade orders and a slight decrease in output. The demand for raw materials remained weak and commercial inventories continued to decline, which was lower than the same period last year. According to CCA forecast, the national cotton imports in 2019 will drop to 1.54 million tons, down 240,000 tons from the previous period, and ending stocks adjusted to 7.84 million tons.

 

1. The Total National Output is Expected to Decline Slightly in 2020/21

The survey in June showed that the national cotton planting area was 46.156 million mu, a decrease of 4.15% year-on-year. It is expected that the yield per unit will increase slightly year-on-year, and the total output is about 5.765 million tons, a year-on-year decrease of 2.4%. The weather conditions in most cotton areas across the country are more suitable for the growth of cotton seedlings. As of June 30, the national cotton budding rate was 97.53%, which was 3% higher than the same period last year.

 

2. Cotton Prices have Risen, foreign Price are Higher than Domestic

In June, the economy was operating smoothly. At the end of the month, the reserve cotton rotation policy was announced. However, the textile market entered the traditional weak, spot transactions slowed down, and cotton prices rose slightly; due to the rebound of the epidemic in some foreign countries. At the end of the month, the CCIndex3128B was 11866 Yuan/ton, an increase of 57 Yuan from the end of the previous month; the monthly average price was 11958 Yuan/ton, a month-on-month increase of 314 Yuan and a year-on-year decrease of 2189 Yuan. China's imported cotton price index FC Index M was 68.34 US cents per pound each month, up 0.56 US cents from the previous month.

 

3. Commercial Inventory is Lower than the Same Period Last Year

In the first half of June, textile enterprises were actively purchasing, and the textile industry entered the off-season in the middle and late June. At the end of the month, the national total cotton commercial inventory was about 3.2389 million tons, down 14.17% from the previous month and 3% year-on-year. The amount of cotton shipped out of Xinjiang has dropped sharply. According to statistics, the amount of cotton shipped out of Xinjiang from specialized warehouses in Xinjiang was 310,400 tons, a month-on-month decrease of 281,900 tons, but higher than the same period last year, 127,700 tons.

 

4. Demand for Raw Materials is Flat, Textile Exports Continue to Grow

The external demand in the textile market was weak this month, domestic demand was sluggish, business operations were difficult, and textile output continued to decline. The yarn production fell 1.5% month-on-month and 7.3% year-on-year; cloth production fell 1.5% month-on-month and 8.4% year-on-year. There are fewer large orders for enterprises, and raw materials are bought as they are used. As of the end of June, the cotton inventory of textile enterprises was 658,300 tons, a decrease of 21,200 tons from the end of the previous month and a decrease of 29,700 tons from the same period last year.


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

Year

Begining Stock

Production

Import

Consumption

Export

Ending Stock

2019/20

807.51

590.57

154

765

3

784.08

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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