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China cotton monthly review – 27th june, 2013

China cotton monthly review – 27th june, 2013 Source:
Date: 06-07-2013
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By the end of May, cotton sowing has completed nationwide by 96.8%, similar with previous year. According to cotton acreage survey conducted by China Cotton Association, the national cotton planting acreage was 68.22 million mu, 6.7% down over 2012.

Since spring sowing, weather conditions in most cotton fields nationwide were positive for cotton growth with less disease and insect occurrence than last year, though weaker development might cause slight yield decline in Yellow and Huai rivers regions and Yangtze region.

Reserve release increased import cotton of 2011 and the new arrivals of 2012 season, which was welcomed by mills, all the import source was sold out and brought up the transaction rate and price of this month. In May, reserve cotton was sold of 596,000 ton, 96.8% up over the month, and the total reserve release was 1.91 million ton by the end of May.

Raw material purchase of textiles declined for the traditional off season, which was dominated by reserve and import cotton, at the same time spot cotton market was sluggish with slightly lower price. In May, CC Index 328 average price was 19,350 Yuan per ton, 0.1% down over the month, 1.4% down Y/Y.

The abundant domestic supply cut down the import volume. In May, China imported cotton of 346,000 ton, 19.8% down over the month, 31.3% down Y/Y, sliding duty import remained high due to the gradual allocation of sliding duty quotas.

For this month, commercial cotton carryover stock changed little. According to CCA, by the end of May, national commercial cotton carryover stock was approximately 357,000 ton, 0.2% up over the month, 73.7% down Y/Y. at the same time, reserve cotton in Xinjiang increased road transport there; during the month, 1,703 vehicles of cotton were transported out of Xinjiang via road, 3.3 times over the month.

Demand of textiles weakened further and the sales of this month was not as good as April. Mills were more cautious at orders, both cotton stock and finished product inventory decreased. Only large companies expanded operation, most middle or small size companies were struggling at making both ends meet.

According to National Bureau of Statistics, in May, yarn production was 2,925,000 ton, 2.1% up over the month, and 7.1% up Y/Y, the increase rate declined by 4.1% Y/Y. Although export of textile and apparel was better than last year, the fast appreciation of RMB and export foreign exchange arbitrage affected the export. By May, export value increase on year on year level declined largely over the month. According to Customs, in May, export value of textile and apparel was 22.97 billion USD, 3.1% up over the month, and 5.2% up Y/Y.

On 6th/7th June, 2013 China International Cotton Conference was held in Qingdao, participants from cotton industry in different countries discussed deeply on current macro policy on cotton and textiles under the theme of Confidence, Transformation and Win-win Growth. Delegates projected a global decline of cotton in 2013/14 season, slight increase in consumption, high cotton stock, and small vibration of price.

In aspect of reserve cotton policy of 2013/14 season and macro control, government department related reaffirmed the implementation of reserve purchase plan in 2013/14 season, and would study on future macro control policy and long-term mechanism on cotton industry development.
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