China Cotton Monthly Review - February,2013

Influenced by domestic and global economy, domestic cotton demand and supply and policy changes, both the 2013/14 seasonal cotton output and import declined, while the ending stock stayed high, giving the cotton price much pressure downward. China Cotton Association adjusted earlier statistics of cotton production in 2013/14 season from 6.77 million ton to 7.00 million ton, 9.44% down than its last season number, the modification was due to latest reserve purchase statistics and more moderate reduction in Yangtze region than earlier prediction. The third cotton planting acreage intention estimate shows further decline of 10.5% than last year.
The Spring Festival holiday in February slowed down market activity in general, by the end of the month, 96.5% of new arrival was sold nationwide, 0.1% faster than last year. Seed cotton buying was only seen in some Yellow river region provinces, the national average buying price from big-bale ginners was 8.32 Yuan/ton, 0.2% down over the month. 
Reserve business restarted after the holiday. By the end of the month, reserve purchase for 2013 season totaled 5.94 million ton, at the same time, 595,000 ton of reserve cotton was sold via auction. Currently, the price risk increases due to the forthcoming reserve policy change, mills are cautious at buying. CC Index3128B has monthly average price of 19,455 Yuan per ton, similar with last month. By the end of February, commercial cotton carryover stock was 300,000 ton nationwide, unchanged with last month. The monthly import was 250,000 ton, 16% down over the month, and 35% less than last February.
Main indexes of textile industry declined than last year. According to National Bureau of Statistics, yarn production nationwide for January and February was 5.15 million ton, 5.3% more than corresponding time last year. Export of textile and apparel in February valued 10.9 billion USD, 62% down over the month and 34% down Y/Y.
According to the third survey on 2014 cotton planting intention in early March, the average planting intention nationwide reduced by 10.5%, 1.6% lower than last survey, because growers in inland and Xinjiang all have worries about the policy change.
The government decided to lower auction price to 17,250 Yuan per ton with no restriction on buying volume, the new policy will start on 1st April.