Monthly Report: The Production was Stable, and the Imports Increased, all Cotton Reserves were Sold Out (Jul. 2020)

Source:China Cotton Association  Date: 31/August/2020

In July, the national economy continued to recover steadily. According to a survey by CCA, the national cotton planting area in 2020/21 is 45.969 million Mu, a decrease of 4.5% year-on-year. The total output is expected to be 5.919 million tons, an increase of 0.2% year-on-year. The reserve cotton meets market demand, and all transactions were made in turn. The Xinjiang epidemic affected the export of Xinjiang cotton, and domestic spot prices rose. The textile market is in the off-season, raw material stocks remain low, and the decline in cotton commercial stocks has narrowed. Cotton imports continue to grow, with US cotton accounting for two-thirds. According to the CCA forecast, the cotton imports in 2019 will be 1.58 million tons, a decrease of 40,000 tons from the previous period, and the ending inventory will be adjusted to 7.88 million tons.

1. The National Cotton Area Declined, and the Output Increased Slightly

In July, the weather conditions in most cotton areas across the country were more suitable for cotton growth, and the occurrence of diseases and insect pests was relatively light. The growth of cotton in Xinjiang and the Yellow River Basin was basically stable, with an increase in yield. The Yangtze River Basin was affected by severe waterlogging disasters. Cotton planting area and output Both are reduced. According to the CCA forecast, Xinjiang cotton area was 36.655 million Mu, a year-on-year decrease of 0.59%, and the output was 5.24 million tons, an increase of 4.1%. A year-on-year decrease of 13.6%; the Yangtze River Basin covers an area of 3.98 million Mu, and the output is only 240,000 tons, which is 35% lower than the same period last year.

2. The Domestic Cotton Prices were Rising, and the Foreign Cotton Prices were Fluctuate Frequently

In July, all the cotton reserves were traded completely. The epidemic in Xinjiang affected the export of xinjiang cotton, and the domestic cotton price continued to rise. Affected by various factors, the international cotton price fluctuates frequently. At the end of the month, China cotton price Index (CCIndex3128B) was 12,319 Yuan/ton, up 453 Yuan from the end of last month. The monthly average price is 12,156 Yuan/ton, up 198 Yuan month on month and down 1994 Yuan year on year.

3. Cotton Imports Continued to Grow, the US Cotton Accounted for the Highest Proportion

In July, according to the General Administration of Customs, the cotton imports were 148,300 tons, an increase of 64.3% month-on-month and a year-on-year decrease of 9.4%. Among the source countries, the US has the largest share, accounting for 66%, while India, Brazil, and Australia account for 11%, 7%, and 6%, respectively. In terms of trade methods, general trade is the most, exceeding 60%, logistics goods in special customs supervision areas are close to 30%, and inbound and outbound goods and imported materials processing in bonded supervision places are less than 10%. In the first seven months of 2020, imported 1.0466 million tons of cotton, down 22.0% year-on-year.

4. The Decline in Business Inventories has Slowed

The downstream textile market demand is weak, the price of textile raw materials has risen, the reserve cotton is favored by textile enterprises, and the decline in cotton commercial inventory has narrowed. At the end of the month, the total cotton commercial inventory was approximately 2,864,100 tons, a decrease of 11.57% month-on-month and 0.83% year-on-year. Affected by the epidemic, the volume of cotton shipments out of Xinjiang continued to decline. According to statistics, the shipment volume of Xinjiang cotton specialized warehouses was 247,600 tons, a month-on-month decrease of 62,800 tons and a year-on-year decrease of 32,900 tons.

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

Year

Begining Stock

Production

Import

Consumption

Export

Ending Stock

2019/20

807.51

590.57

158

765

3

788.08

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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