China Cotton Monthly Review - March, 2014

During the first quarter of the year, the domestic economy moves smoothly though GDP increase rate slowed down. The main indexes of textile industry kept the increase trend, though at slower pace compared with the same time period last year. The seed cotton procure and processing have completed generally nationwide, and 6.31 million tons of seasonal harvest were purchased by state reserve, and 6.58 million tons actually entered the warehouses, about 94% of the seasonal yield. The reserve cotton release sold larger volumes than the first quarter last year. The lint spot market is still sluggish with price moving downward in March after two months steadiness. In early April, government announced the targe price for Xinjiang cotton of 19,800 Yuan per ton, which encouraged cotton growers and stabilized acreage there, while inland planting intention continued to decline as no clear supportive government policy ahead. According to Mid April survey by CCA, nationwide the cotton acreage estimated to be 61.15 million mu (4.08 million hectares), 12.6% down Y/Y.
According to statistics of National Statistics Bureau, during the first quarter of the year, the added value increase by mills above designated size is 6.6%, the yarn production is 8.37 million tons, 6.3% up Y/Y; the gross operating profits of mills and textile & apparel sales are 12.3% and 12.8% separately, higher than the average industry level. Affected by seasonal change, the export value of textile and apparel declined largely in February and restored in March, the total export value of the first quarter is 58.1 billion USD, slightly increased over the corresponding time last year, and the increase rate reduce by 15%. The slower global economy recovery than expected, the restrained demand from mills and the import quotas restriction all together drove import cotton volume downward largely, for the first quarter China imported cotton of 760,000 tons, 44.3% down than the corresponding time last year. Cotton yarn import also slowed down due to narrowed cotton price gap home and abroad, the first quarter import is 510,000 tons, 5.9% up over the first quarter last year, while the increase rate is 46% less. ??
Before the base price of reserve release cotton was lowered in April, the purchase of mills had already reduced to cut te stock level. The commercial carryover stock is 238,000 tons nationwide by the end of March, 62,000 tons less over February according to survey of CCA. In March, reserve release transaction completed by 123,000 tons, for the first quarter, the trade volume is 460,000 tons, 54% less than the frist quarter last year. The lint spot market is even more sluggish, CC Index 3128B has March average of 19,440 Yuan per ton, 15 Yuan down over the month.
Around the announcement Xinjiang target price, China Cotton Association conducted the fourth national cotton planting intention survey in 2014 and the first cotton sowing process survey for this season. The survey showed that, after the target price announcement, cotton planting intention in Xinjiang climbed up to the same level over last year, while that in inland decline further by 1-2%. According to the weighted average calculation on the surveyed growers, the average cotton planting intention nationwide declined by 12.6%, 2.1% further than last survey. By 15th April, the cotton sowing process is 55.4%, 10% faster than the corresponding time last year according to CCA survey.