China Cotton Situation Monthly Report (Dec, 2010)

In October, China\'s CPI hit two years\' high, inflation pressure increase further. In November, government has issued several policies to stabilize price level. Meanwhile, other authorities have issued corresponding policies and measures. On Cotton, including standardize operation and processing order, banning unlicensed acquisition, strengthen supervision on futures and e-trading market, inhibit excessive speculation, also urged the railway departments of cotton dispatching work to guarantee the market supply. Under the series of policy regulation, cotton prices declined obviously. From Mid-november to the end of the month, Zhengzhou cotton futures fell by nearly 25 percent, spot prices down by more than 16%, seed cotton purchasing price and yarn saling price also synchronous decline. The market appears panic, cotton farmers won\'t sell, processing mill dare not to procure, textile enterprises reluctant to buy, all are in waitting.

For the national pectinophora weather is favorable to cotton open bolls, cotton picking basically was end. Because the general cotton growth meteorological conditions are good, cotton grow slightly recovery, actual output slightly higher than expected before. China Cotton Association expects that national cotton output is 665 million tons, 20,000 tons more than last month forecast, down by 2.1% from last year. By the end of November, the national average picking progress is 95%, slow 3 percentage year-on-year. Farmer selling price rose first, then declined, the month average price falls to 10.93 yuan/kg, down by 2.6% from last month, but up by 52% year-on-year. Because cotton prices declined, farmers wait-and-see mood is aggravating, plus cotton brokers and processing mill purchase caution, the cotton selling slowed down. The national farmer selling average progress is 70%, slowed by 12 percentage points year-on-year. China Cotton Index (CC Index328) monthly average price is 28,542 yuan / ton, up by 16% from last month, 99% year-on-year. Cotton processing enterprises average purchasing price is 11.05 yuan/kg, up by 7% from last month, 82% year-on-year.

This year the cotton overall price is higher, growers increase revenue, but the present big fluctuations make cotton farmers disoriented, most of them are in hesitation for the next year\'s planting. Meanwhile, cotton distribution enterprises and textile enterprises face more operation difficulties. Industrial chain parties jointly desire is to stablize the market and industry sustainable development.