Monthly Report On Cotton Situation In China: Cotton Demand Is Weak, Cotton Prices Decrease A Lot (August 2019)

In 2018/19, influenced by factors such as Sino US trade friction, orders for downstream cotton textile industry were reduced, market weakness was aggravated, and demand for cotton decreased. The output of cotton has increased steadily, the import cotton has increased substantially, the cotton reserves have been successfully carried out, the domestic market is abundant, the cotton sales are slow, and the inventory level is relatively high. Since May, with the escalation of Sino US trade frictions, domestic cotton prices have plummeted. According to the statistics of China Cotton Association, consumption in 2018 was 8 million 70 thousand tons, down 5.6% compared with the same period last year. Cotton output was 6 million 110 thousand tons, an increase of 1.05% over the same period last year. In the first 11 months of the year, China imported 1 million 940 thousand tons of cotton, an increase of 67% over the same period last year.

In August, when the cotton blossomed to the boll opening period, the pests and diseases seldom occurred, and the output was basically stable, but the picking of new cotton was delayed. According to the China Cotton Association survey, it is estimated that the total output of cotton in China will be 6 million 91 thousand tons, down 0.31% from the same period last year, an increase of 55 thousand tons compared with the previous period. During the month, the Sino US trade frictions escalated again, and the textile market remained weak. With the purchase and purchase of textile enterprises, the national cotton business inventories declined, but the decline narrowed from last month.

(1) cotton development is late, output increases in Xinjiang, and inland decreases.

In August, most of the cotton growing areas in Xinjiang were mainly sunny, suitable for cotton growth, with an expected output of 5 million 225 thousand tons, an increase of 1.7% over the previous year, an increase of 88 thousand tons compared with the previous period and an increase of 1.5% in unit production. The growth of cotton in Xinjiang is late this year, which is about 10 days late last year. It is expected that the Xinjiang machine picked cotton will start defoliant in the middle of 9. The harvest will start in late September. The growth of the cotton growing areas in the mainland was worse than that of the same period last year. In some parts of the country, there was more rain and more lodging than in the previous period. The output of the the Yellow River River Basin was lower than that of the previous period. The estimated output of the the Yellow River River Basin was 467 thousand tons, down 9.84% from the previous period, down 9 thousand tons compared with the previous period, and the unit production decreased by 3.24% compared with the previous period. The Yangtze River Basin is expected to produce 361 thousand tons, down 11.34% from the same period last year, down 23 thousand tons compared with the previous period, and the unit output decreased by 2.95% over the same period.

(two) the textile market remains weak and exports are declining again.

In August, there was no improvement in the downstream demand of textile market, and the procurement of raw materials in the market was deserted. As of August 31st, textile enterprises had 687 thousand and 300 tons of cotton stocks, down 18 thousand and 200 tons from the end of last month, down 228 thousand and 900 tons compared with the same period last year. Yarn production decreased by 1.3%, down 4.2% compared to the same period last year. Cloth production decreased by 2.1%, down 4.8% compared to the same period last year.

According to customs data, the export of textiles and clothing in August was 25 billion 710 million dollars, down 4.6%, of which textile exports were 10 billion 10 million dollars, down 2.5%, clothing exports 15 billion 700 million dollars, down 5.9%. In the 1-8 months, textile and apparel exports totaled 177 billion 440 million US dollars, down 2%, of which 79 billion 400 million US dollars in textile exports, an increase of 1%, and clothing exports 98 billion 40 million US dollars, down 4.3%.

(3) the volume and price of reserve cotton both slipped.

In August, the total amount of listed cotton reserves was 241 thousand and 700 tons, and 18 thousand and 900 tons less than last month. The total turnover was 171 thousand and 300 tons, a decrease of 74 thousand and 100 tons from the previous month. The turnover rate was 70.88%, which was 23.29 percentage points lower than that of last month. The average transaction price was 11903 yuan / ton, down 902 yuan from last month, and the price of 3128 yuan was 13061 yuan / ton, down 814 yuan from last month.

(four) cotton prices both fell at home and abroad.

In August, domestic commercial inventories were still large, and cotton spot prices accelerated downward under the pattern of oversupply. At the end of the month, China's cotton price index (CCIndex3128B) was 12985 yuan / ton, down 1082 yuan from the end of last month, and the monthly average price was 13534 yuan / ton, down 616 yuan, down 2747 yuan compared with the same period last year.

International cotton prices declined, but the decline was less than domestic, and the difference between the inside and outside cotton prices narrowed at the end of the month. The price index of China's cotton imports FCIndexM 72.04 cents per month, down 4.74 cents / pound. The end of the month is 71.18 cents / pound, down from 4.90 cents / pound at the end of last month, and 12090 yuan / ton below 1% tariff, which is lower than the 895 yuan / ton of domestic stock in the same period, which was slightly narrowed by 251 yuan / ton at the end of last month.

(five) narrowing of commercial inventories

In August, cotton prices accelerated and textile companies stayed on the sidelines. At the end of the month, China's cotton business inventories continued to decline, but the decline narrowed from last month. According to the China Cotton Association survey: by the end of August, the total inventory of cotton business in China was about 2 million 520 thousand and 900 tons, a decrease of 367 thousand and 200 tons from the previous month, with a decrease of 83 thousand and 900 tons, up 893 thousand and 700 tons compared with the same period last year.