China Cotton Monthly Review - October, 2013

Seed cotton picking completed by nearly 90% in October. Seed cotton purchase was in prime. Reserve buying was more than 1 million, though 40% less than corresponding time last year. Supported by reserve, domestic cotton spot price and seed cotton buying price was stable. Textiles were cautious at buying the raw materials in the sluggish market, especially when expecting reserve cotton release in near future. Ginners sold mostly to state reserve.
Weather in most cotton regions in October was positive for cotton harvest. According to CCA survey, by end of the month the average picking finished by 87.5%, similar with last year. 57.4% of seed cotton out of this seasonal yield was sold, 2.7% less Y/Y, among the major cotton regions, Xinjiang processed the fastest, Yellow River the slowest, while many yield in Yangtze region disqualified for reserve purchase due to earlier natural disasters. 
As new arrivals cumulating, reserve purchase increased in both daily target and actual transaction, though postpone of new yield and strict quality requirement by reserve slowed the general process. In October, target purchase was 1.31 million ton in total, completed by 0.98 million ton including more than 70% of Xinjiang cotton, 30% less than last October. By the end of October, total purchase of state reserve for 2013/14 season was 1.08 million ton, 39% less Y/Y.
During this prime time for harvest, the quality of new arrivals improved, more ginners entered the market. In October, average buying price of seed cotton for big bale ginners was 9.09 Yuan per kilo, 4.4% up over the month and 0.47% down Y/Y.
China cotton pre-alarm system started to publish CC Index under the new quality standard. In October, the average price for CC Index3128B was 19,588 Yuan per ton. Import cotton declined due to limited quotas, according to Customs, China imported cotton of 141,000 ton, 29.9% less over the month, and 48.1% down Y/Y. commercial cotton carryover stocks reduced to 494,000 ton nationally by the end of October, 30.9% down over the month and 3.7% less Y/Y.
The cumulative expectations for reserve release made textiles more cautious at raw material purchase, the stock of which declined while at the same time production and sales also reduced, finished product inventory increased. According to Customs, in October, export of textile and apparel valued USD 24.1 billion, 5.9% more Y/Y, 9.4% less over last month. According to National Bureau of Statistics, October yarn output was 3.27 million ton, 3% up over the month, 6% up Y/Y.
In late October, China Cotton Association announced the company list of qualified cotton companies for large size contract. The participant of large size contract expedited the reserve purchase speed; at the same time actions were taken to disqualify the fraud ginners who selling cotton not from this seasonal arrival or the unqualified cotton to the reserve, the cotton already summited shall be removed from reserve.