Market Analysis: Data Shows That China'S Cotton Situation Tends To Be Better

1、 Cotton planting area in Xinjiang will be basically stable in 2023, and the mainland will continue to decline

In February, the China Cotton Association carried out the second survey on cotton planting intention in 2023. The survey results showed that compared with the first survey, the cotton planting area in China continued to decline, of which the cotton area in Xinjiang was basically stable, and the cotton area in the Yellow River basin and the Yangtze River basin declined more. In this survey, the cotton planting intention area in China was 42.1196 million mu, a year-on-year decrease of 3.7%, The decrease was 2.7 percentage points higher than that of the previous period. Among them, Xinjiang cotton area was 37.6842 million mu, down 0.5% year on year, basically equal to the previous period; The Yangtze River basin is 1.7497 million mu, down 30.3% year on year, 23.1 percentage points more than the previous period; The Yellow River basin has 2.4198 million mu, a year-on-year decrease of 17.8%, 6.6 percentage points higher than the previous period.

In 2022, affected by the fall in cotton prices, the income of cotton farmers across the country will decline significantly, but the cotton planting area in Xinjiang will remain relatively stable, mainly due to the protection of target price policies. According to the estimation of the cost and benefit of cotton farmers' cotton planting in 2022 by China Cotton Association, the unit yield increase and purchase price in the Yellow River Basin are relatively high, and the average cotton planting income per mu is 560.6 yuan; The yield per unit area of the Yangtze River Basin decreased significantly, with the average income per mu only being 68.1 yuan; Due to the relatively low purchase price, the average income per mu in Xinjiang is as low as 58.4 yuan/mu, a year-on-year decrease of more than 97%. However, with the target price subsidy, the actual income will still far exceed that in the mainland.

2、 Processing is still in progress and is expected to be completed by the end of April

In February, there was still a small amount of cotton purchase in China. This year, the purchase of seed cotton was affected by the epidemic situation, which was nearly a month later than previous years. It is expected that processing will end at the end of April. Due to the poor quality of the tail flower, the purchase price has declined. As of February 28, the total processing volume of 1069 400 type cotton processing enterprises nationwide was about 5.8621 million tons, up 8.9% year on year; The processing volume in Xinjiang was about 5.771 million tons, up 9.4% year on year; The total processing volume of the sample enterprises in the mainland was 91100 tons, a year-on-year decrease of 14.6%.

The quality of new cotton is generally better than that of last year. According to the statistics of China's cotton notarization and inspection data, as of February 28, there were 1069 cotton processing enterprises conducting notarization and inspection in 2022. The national inspection volume was 5.5948 million tons, an increase of 6% year on year. Only the length index of new cotton was worse than that of last year, and the other three indicators of color level, micronaire value, and breaking ratio strength were better than that of last year.

3、 The decline of foreign cotton is greater than the narrowing of the price difference between domestic and foreign cotton

Since February, the domestic economy is expected to recover well. Textile enterprises have resumed production. Affected by the decline of the futures market, spot prices have corrected at the end of the month. In the international arena, the inflation pressure triggered economic recession concerns, and the Federal Reserve's expectation of interest rate increase increased. The international cotton price fluctuated downward, falling more than the domestic price, and the difference between internal and external prices narrowed slightly. On February 28, China's cotton price index (CCIndex3128B) was 15390 yuan/ton, down 3% month on month and 32.4% year on year. The monthly average price was 15712 yuan/ton, up 2.6% month on month and down 31.2% year on year; Over the same period, the Cotbook A index was 99.4 cents/pound, down 1.1% month on month and 26.2% year on year, with a tariff price of 16501 yuan/ton, 1111 yuan higher than the domestic cotton price, 189 yuan lower than the previous period.

4、 Small increase in commercial inventory

In February, the domestic cotton market had sufficient supply of resources, the domestic cotton price fell, textile enterprises sought bargains to replenish their stocks, the commercial inventory increased slightly, the transportation demand of cotton to Xinjiang rebounded, and the shipment volume of Xinjiang cotton increased month on month and year on year. As of February 28, the national cotton commercial inventory was 5.2891 million tons, an increase of 170400 tons over the previous month, lower than 119300 tons in the same period last year. The shipment volume of Xinjiang cotton specialized warehouses out of Xinjiang in that month was 556100 tons, an increase of 178500 tons month on month, or 47.3%, higher than 408800 tons in the same period last year.

5、 Textile market demand is expected to be better

After the Spring Festival, textile enterprises had sufficient short-term orders, and textile output increased month on month. In the traditional peak consumption season from March to April, enterprises are more willing to replenish the stock, and the stock of raw materials has increased. According to the survey, the yarn output increased by 6.3% month on month and 8.8% year on year; Cloth production increased by 5.1% month on month and 6.7% year on year. As of February 28, the cotton industrial inventory of textile enterprises in the warehouse was 686200 tons, an increase of 93000 tons over the end of last month, and a year-on-year decrease of 90100 tons.

Affected by the high base last year, sluggish overseas demand, reduced orders and other factors, China's textile and clothing exports declined. According to the data of the General Administration of Customs, from January to February 2023, China's textile and clothing exports reached 40.84 billion US dollars, down 18.5% year on year, including 19.16 billion US dollars in textile yarn, fabric and products, down 22.4% year on year, and 21.68 billion US dollars in clothing and clothing accessories, down 14.7% year on year.