China Cotton Monthly Review - September, 2014

Affected by weather factors, the crop growth delayed this year, the harvest and selling was postponed and the total yield reduced. Cotton supportive policy was clarified, Xinjiang cotton target price reform trial implementation plan was announced, seed cotton purchase started nationwide. The dual influences of postpone harvest and declined price added to the cautious mood from ginners and sell reluctance from growers, therefore, market is in the stalemate and lint spot price declined largely compared with last season.
During the month of September, the lasting rain in most of Yellow River region, north of Yangtze, north and east of Xinjiang impeded cotton growth there, and yield prediction in the three regions would decrease slightly. According to CCA survey, national cotton yield is estimated to be 6.66 million tons, 50,000 tons less than last survey. The slow crop growth in Xinjiang and Yangtze caused postponed harvest; the premature crop of Yellow River region speed the harvest there. By the end of September, around 33.6% of national cotton had been picked, 11% down Y/Y.
Cotton growers have high price expectation and are reluctant to sell the new harvest; at the same time the market price decline make ginners very hesitate to buy. By the end of September, only 3.9% of new yield was sold nationwide, 13% less Y/Y. The purchase average price for seed cotton equivalent 3128 bought by large bale ginners was 6.63 Yuan/kilo, 23.9% down Y/Y. Affected by the slow process, the commercial carryover stock was still dominated by import cotton and reserve release cotton. By the end of September, national commercial carryover stock totaled 133,000 tons, similar with last month, and 81% down Y/Y.
As new arrival accumulates, lint price decreased more than 1,600 Yuan per ton in September. The average price for September of CC Index 3128B is 16,591 Yuan/ton, 2.8% down Y/Y. Textile market came to traditional peak season, although the slow recovery of demand and unclear market outlook impeded cotton sales. As import quotas decreased, cotton import volume declined. According to Customs, in September, China imported cotton of 123,000 tons, 40% down over the month and 39% down Y/Y. The cotton yarn import recovered to 174,000 tons in September, 15.8% up over the month. The textile production continued to increase, yarn production was 3,405,000 tons, 5.1% up Y/Y for the month, although export of textile and apparel decreased by 6.5% to 2,855,000 tons. Since October, cotton processing speeds up as key cotton companies entered the market to purchase.