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China cotton monthly review – 28th march, 2013

China cotton monthly review – 28th march, 2013 Source:
Date: 08-04-2013
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Half of the 2012/13 season has passed, and seed cotton trade was generally finished. Supported by reserve policy, the market since the start of the season was quite stable, seed cotton purchase price edged upward slightly, and was faster than previous years, and ginners were very active at reserve trade, which accounted for nearly 90% of the overall yield of this season. Textiles were confronted with difficulties from different aspects.

Since the beginning of this year, international cotton price continued to increase, narrowing down the gap domestic and international, textile production kept augmenting, so was the textiles and apparels export.
Due to Spring Festival holiday in February, both reserve purchase and release suspended for a while, therefore, business between ginners and farmers declined, raw material purchase by textiles reduced and cotton price kept steady.
Seed cotton sale was generally ended, except in sporadic areas in Yangtze and Yellow River regions. According to survey of CCA, by the end of February, seed cotton sales processed by 96.4% nationwide, 7.9% up Y/Y, among which 98.7% in Yangtze region and 84.6% in Yellow River region.

Seed cotton offering price was unchanged for the week with only a few ginners remaining in business.
In February, the reserve purchase volume and ratio declined largely. For the month, reserve cotton trade was 209,000 ton, 74.8% down over the month.

By 28th February, reserve purchase of 2012/13 season was 6.14 million ton.

At the same time, reserve release amount reduced due to influences of quality, price and company finance. In February, the released cotton was 203,000 ton, 45% down at slightly higher price over the month.

By 28th February, reserve cotton release totaled 570,000 ton.
Commercial cotton carryover stocks increased over the month, affected by the undelivered reserve cotton contracts, though still much lower than the corresponding time last year. According to CCA survey, by the end of February, commercial cotton carryover stock totaled 329,000 ton, 28.5% up over the month, and 76.4% down Y/Y.
Reserve cotton trade dominated the business, and spot market was inactive with stable price. CC Index328 has average price of 19,288 Yuan per ton in February, 0.1% up over the month, and 1.1% down Y/Y. International cotton price increase narrowed down its gap with domestic, import volume reduced and that in full duty increased distinctively. According to Customs, in February, China imported cotton of 379,000 ton, 17% down over the month, and 23.7% down Y/Y, among which nearly 40% was in full duty. Textiles production continued to increase with better export. According to National Bureau of Statistics, the first two month yarn output of 2013 was 4.97 million ton, 11.3% up Y/Y. According to Customs, export of textile and apparel valued 41.17 billion USD during January and February, 31.9% up than the same timeframe last year.
On 26th March, China Cotton Association held the second session of the fifth council meeting and cotton situation analysis meeting. Delegates believe that reserve policy performed significant influence on stabilizing the market and protect cotton growers, though the sustainability of the policy was questioned. Suggestions were raised that government should keep the balance among different sectors of the industry chain, and build long time mechanism for cotton industry development with domestic and international markets. As for cotton production of 2013, Surveys from different sources all indicated decline in acreage in inland and stable trend in Xinjiang.

According to survey of CCA, cotton planting intention estimate declined by 6.8% over the year, and projected acreage was 68.16 million mu, which was less than 70 million mu for the first time during the recent ten year.
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