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China's latest cotton acreage estimates down 12.6%
03
Jul '14
During the month of May, cotton sowing has completed nationwide in China, the weather conditions are not as good as the corresponding time last year. The delay in cotton growth may result in reduced unit yield. Textile is in off season and mills are looking forward to further cotton price decline and are very cautious at buying new stock.
 
Reserve cotton transactions have reduced, so has the import cotton volume during this month. Spot market is more than sluggish and commercial carryover stock is at a historical low. According to current cotton usage and market supply & demand, it is estimated that seasonal Chinese cotton import and consumption will reduce and ending stock will increase.
 
According to survey of China Cotton Association, the China’s cotton acreage of this year estimates to be 4.08 million hectares, 12.6% down over the year. From the cotton sowing to the end of May, weather conditions in cotton regions nationwide are not as good as last year. 98.8% of the cotton planting is completed, 2% faster than the corresponding time last year and the most cotton plants are in the third to fifth leaf stage. The large temperature change, heavy precipitations, gales and sand storms affected some cotton fields, especially in some fields in Xinjiang. Occurrence of disease and insects, it is light.
 
Domestic cotton market is still sluggish. Release of Reserve cotton continue. Though for the month the transaction volume reduced to 390,000 tons, due to weak demand, insufficient funds, low reserve cotton quality and price estimate. By the end of May, reserve release totaled 1,775,000 tons.
 
The spot market is weak with rare resource and falling price. The monthly average price for CC Index 3128B is 17,434 Yuan/ton, 1,003 Yuan down over the month. At the same time, import cotton price continued to increase and the import volume decreased over the month and on y-o-y level. In May, China imported cotton of 192,000 tons, at average price of 2,137 USD/ton.
 
Due to reduced reserve release, import cotton and spot transaction, the commercial carryover stock reduced to the lowest point in recent three years. According to CCA survey, national commercial carryover stock is approximately 193,000 tons, 14.2% less over the month and 45.9% less y-o-y.
 
Although the indexes showed recovering signs, the whole industry is still sluggish and the outlook is challenged by decreased cotton price. Domestic cotton demand still needs time to recover in the context of the current slow textile industry progress.

China Cotton Association

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