Cotton Balance Sheet Update

By CnAgri2013-05-08 11:21:20 Print China’s yarn production by medium and large mills registered 2.975 million MT in March, 26.2% more than the month before and 6.75% more than the same period of last year. Yarn production totaled 7.945 million MT in January ~ March, an increase of 9.9% on the year-on-year basis. The promulgated figures showed a yarn production increase of 5.7% in March and 10.7% in January ~ March, both on the year-on-year basis.

BOABC estimates that medium and large mills consumed about 880,400 MT cotton in March. Other fiber consumption was estimated to be 2.037 million MT in March and 5.44 million MT in January ~ March, up 16.15% and 19.6% respectively on the year-on-year basis.

China’s cotton production is estimated to be 7.913 million MT in 2012/2013. Uncombed cotton imports were 528,000 MT in March and 3.041 million MT between August of 2012 and March of 2013 (a decrease of 11.79% on the year-on-year basis). Cotton imports are predicted to be 4.046 million MT in 2012/2013. The nation’s cotton inventory was about 10.2 million MT at the end of March, suggesting a stock index of 11.6, above the 9.0 recorded in the same period of last year. A large cotton inventory may result in a soft cotton price.

The cotton inventory in March consisted of 9.269 million MT state reserve, 642,000 MT textile mills’ stock 213,800 MT traders’ stock and 100,000 MT on-farm stock, accounting for 90.82%, 6.29%, 2.09% and 1% of the total respectively. Farmers sold 99% of their cotton by March. 437,200 MT state-reserved cotton was sold by auction in March.

Cotton price averaged RMB19,355/MT in March and RMB18,937/MT between August of 2012 and March of 2013, down 1.36% and 2.45% respectively on the year-on-year basis.

Cotton consumption is predicted to be 9.292 million MT in 2012/2013. Year-end inventory and safety index are predicted to stay high at 8.249 million MT and 87.2% respectively. Cotton price may average RMB19,100/MT in 2012/2013, slightly lower than the previous year.

In the 2013/2014 crop year, cotton acreage is anticipated to shrink 4.59% to a level of 4.987 million hectares, compared with last year. Cotton acreage is squeezed by swelling production cost and low returns in eastern provinces. Cotton production and yield are predicted to be 7.576 million MT and 1.52 MT/hectare respectively. Cotton imports are predicted to be more than 3 million MT in the crop year. Cotton price may pick up to RMB19,580/MT.

From “China Cotton Bi-Weekly Market Report”