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China cotton monthly review - april, 2013

China cotton monthly review - april, 2013 Source:
Date: 15-05-2013
Visits: 428
Very Poor

The economy during the first quater in 2013 moves steadily. Textile industry imporved with faster production and export rate. After the close of 2012/13 seasonal temporary reserve purchase, the reserve cotton release continued, which was the main purchase together with import cotton for mills, while domestic cotton market was sluggish. 2013/14 season reserve purchase plan was announced with unchanged purchase price. Response from Cotton growers was limited, the national cotton acreage was projected to decline.

By the end of March, 2012/13 reserve purchase closed with 6.5 million ton, about 90% of the seasonal yield. At the same time, reserve cotton release started since January, and the first quater trade reached 1.01 million ton. In March, operation rate of mills inproved, and the cotton demand increased accordingly, reserve release trade augmented largely over the month, with steady price, though the released cotton variety impeded the trading rate.

At the same time, certain sliding duty import quota was released, in March, import cotton volume increased largedly over the month. In March, import cotton was 529,000 ton, 39.6% more over the month, 15.4% less Y/Y. The full duty import reduced slighlty in proportion. During the first quater, import cotton totaled 1.37 million ton, 12.9% less Y/Y, though still a large volume in record. 

Domestic cotton spot market has no realized price. CC Index328 has March average price of 19,356 Yuan per ton, 0.35 up over the month, and 1% less Y/Y. Internationally cotton price increased mainly, narrowing down the gap between them, decreased of around 3,000 Yuan per ton was seen both from 1% tariff duty price and sliding duty price. The commercial carryover cotton stock increased continually affected by reserve release. CCA cotton warehousing and logistics branch reported that by the end of March, commercial cotton carryover stock was 348,000 ton, 5.8% up over the month, and 77.4% less Y/Y.

Textile received more orders, and production increased. According to National Bureau of Statistics, in March yarn production was 2,975,000 ton, 5.7% more Y/Y, the first quater yarn production was 7,937,000 ton, 10.7% up Y/Y,  the increase rate was 1.7% slower than the same timeframe last year. Textile and apparel export recovered, the Customs statistics showed that, in March, export value of textiles and apparel was 16.72 billion USD, 11% less Y/Y, the first quater export valued 57.89 billion USD, 15.7% up over the month, the increase rate was 12.8% more over the same timeframe last year.

Reserve plan did not release in March. Cotton has relatively lower profit than food crops, so growers were inactive at planting cotton. According to CCA, cotton planting intention decreased by 6.4% over the year, the projected acreage was 68.46 million mu. Around Tomb Sweeping Day, on 4th April, large scale sowing in Xinjiang started, and progressed faster than previous year; while in other areas, sowing did not start in full swing.

On 8th April, 2013 season cotton temporary reserve purchase plan was announced by seven government departments, ensuring the reserve price of 20,400 Yuan per ton for standard lint, the quality requirement would follow new cotton national standard. The release of the reserve purchase plan encourged cotton planting in some degree.
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