Cotton Spot Price Recover, Planting Intention Acreage Decline China Cotton Monthly Report (Dec. 2019)

During the year of 2019, with stable cotton policy, reserve cotton rotation processed smoothly, import cotton volume increased and cotton production slightly declined, while the domestic price largely decreased affected by sufficient supply and reduced demand due to exterior uncertainties. Since May, cotton spot price declined largely because of the repeated trade conflicts between China and U.S. on 3^rd October, CC Index(3128B) reached the bottom of 12,598 Yuan/ton, 2,771 Yuan less than the beginning of the year. Then it regained some ground to 13,369 Yuan/ton by 31^st December, thanks to the reserve cotton purchase and the Sino-US agreement been signed.Over the year, the average price is 14,212 Yuan/ton, an annual decrease of 10.5%.

1.Cotton price home and abroad increased

In December, the good news on Sino-US trade agreement encouraged the market, and cotton spot price moved upward steadily. By the end of the month, CC Index 3128B was 13,369 Yuan/ton, 277 Yuan higher than the end of November, the monthly average price is 13,154 Yuan/ton, 94 Yuan higher, while 2,253 Yuan less than the corresponding time last year. The international cotton price increase enlarged the price different between home and abroad. The FC Index M has monthly average price of 76.95 cent/lb., 1.32 cent higher over the month. Price under 1% tariff was 13,724 Yuan/ton, 355 Yuan higher than domestic spot price, the difference was 191 Yuan larger than the end of November,

2.Cotton planting intention acreage of 2020 decrease

In December, the first national cotton planting acreage intention conducted by CCA indicates national planting intention is 297 hectares, down by 7.5%, due to pending decisions on cotton subsidy policy, relatively low seed cotton price. To be specific, Xinjiang reduced by 7.68%, Yellow River basin and Yangtze basin reduced by 8.12% and 5.3% separately.  

3.Seed cotton procurement processed faster than last year

In December, the cotton harvest had finished nationwide, and the procurement rate was 98.55%, at average price of 5.45 Yuan/kilo, 10.21% less over the year. According to CCA survey, the national cotton production of 2019 season is 5.90 million tons, 3.35% less over the year. The national commercial stock was 5.18 million tons in December, 15.34% over the month.

4.Reserve cotton transaction rate was low

On 2^nd December, reserve cotton purchase had started, and by the end of the month, only 37,000 tons of cotton was sold to reserve and the transaction rate was 24.03%, at the lowest price of 12,879 Yuan/ton, and the highest price of 13,522 Yuan/ton.

5.Positive market situation seen by textile  mills

During the month, the textile market recovered with increased confidence. The production of yarn increased by 0.9% over the month, and down by 1.4% year-on-year; the cloth production increased by 0.3% over the month. By 31^st December, cotton inventory from mills is 732,500 tons, 9,300 tons over the month, and 137,700 tons less Y/Y.  

According to Customs, the export values of textile and apparel in December is 24.95 billion USD, 13.08% up over the month, and 7.95% up than last December, among which textile export is 11.006 billion USD, up by 10.58% over the month, and 11.37% more than last December, apparel export is 13.948 billion USD, up by 15.13% over the month, and 5.39% more than last December. For the calendar year of 2019, the total export value of textile and apparel is 271.567 billion USD, 1.85% down over the year, among which textile export is 120.199 billion USD, 0.9% up over the year, apparel export is 151.368 billion USD, 4.0% down over the year.

       China Cotton Balance Sheet (Jan. 2020) (10,000 tons)