Industry Data: China'S Cotton Production Reduction In The New Year Is Lower Than Expected

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　　USDA According to October data, China's cotton output will increase by 44000 tons to 5.879 million tons in 2022/2023, annual consumption is expected to increase by 545000 tons to 8.165 million tons, imports will increase by 470000 tons to 217.7 tons, ending inventory will decrease by 111000 tons to 8013000 tons, and inventory consumption ratio will decrease by 8.48% to 98.14%.

According to the data of the National Cotton Market Monitoring System in October, China's cotton output in 2022/2023 is 6.72 million tons, with a year-on-year increase of 920000 tons. The annual consumption is expected to be 7.7 million tons, with a year-on-year increase of 400000 tons. The import volume is expected to be 1.42 million tons, with a year-on-year decrease of 310000 tons. The ending inventory is 5.71 million tons, with a year-on-year increase of 420000 tons. The inventory consumption ratio will increase from 72.13% of the previous year to 74.02%.

The cotton output in 2023/2024 is expected to be 6.05 million tons, a year-on-year decrease of 670000 tons, the annual consumption is expected to be 7.6 million tons, a year-on-year decrease of 100000 tons, the import is expected to be 1.7 million tons, a year-on-year increase of 280000 tons, and the ending inventory is 5.84 million tons, a year-on-year increase of 130000 tons. The inventory consumption ratio will increase from 74.02% of the previous year to 76.67%, the annual gap between production and demand will increase by 570000 tons, and the annual production and sales will decline, Imports increased slightly, and inventory at the end of the final period increased slightly.

The planting area of Xinjiang is about - 8% year on year, and the output of Xinjiang is estimated to be 5.5-5.6 million tons. The yield per unit area in northern Xinjiang is generally lower than expected, while large-scale purchase in southern Xinjiang has not yet started. It is estimated that the cotton yield in Xinjiang is about 480-5.2 million tons.

The planting cost has increased a lot, and the land rent, fertilizer, pesticide, etc. have increased in succession. The cost of self owned land is about 2000 yuan/mu, the contract fee has increased by nearly 50% to 1000-1500 yuan/mu, and the land parcel cost is 3000-3500 yuan/mu. However, the pressure on bank credit has increased, and there is a large gap between the purchase price and the farmers' heart price, leading to cotton farmers' reluctance to sell.

Behind the rush to harvest new cotton after the National Day holiday in the first two years is the serious mismatch between the more than 10 million seed cotton and the more than 20 million ginning capacity. The sales rhythm of cotton harvested at a high cost and the risks in the middle and lower reaches of the market have brought hidden dangers to the market, and the impact has continued to the present. The reduction of the total number of ginning plants can alleviate the competition situation of Xinjiang plants with insufficient production capacity, and the rush harvest will also be reduced. However, the total number of reduction is small, and the contradiction of high production capacity and low output is still prominent. In the context of insufficient food for ginning plants, it is inevitable that the rush harvest will be phased. Given the pessimistic expectations of current and future prices and supply and demand pressures, the rush harvest situation will be significantly reduced. In addition, the inventory pressure of the previous two years still exists, and the capital pressure of enterprises is also large, and the purchase price is distributed in batches and monitored, which will further increase the financial tension in the hands of enterprises.

The new cotton harvest season will start in 2023/2024, and various production areas throughout the country will start weighing. The northern Xinjiang is mainly machine picked cotton, and the southern Xinjiang is mainly hand picked cotton. A large number of centralized acquisitions have not yet started, and the progress of new cotton processing is slower than last year. In the next 2-3 months, cotton will be centrally listed. According to the data provided by MySteel, the opening price of machine-made seed cotton in Kashgar, Bazhou and Aksu markets will be 8-8.2 yuan/jin, down 0.2 yuan/jin on average compared with that before the festival. As of October 21, the cumulative processing volume of Xinjiang lint increased by 59100 tons to 6201000 tons. According to the data of Xinjiang Cotton Association, on October 20, the average price of seed cotton in Changji, North Xinjiang, was 7.70 yuan/kg, equivalent to 17482 yuan/ton of lint. The average price of machine picked seed cotton in Aksu, southern Xinjiang is 7.65 yuan/kg, which is equivalent to 17218 yuan/ton of lint. The estimated average profit of Xinjiang 400 type ginning plant is more than - 150 yuan/ton, and the ginning plant has lost profits.