Weekly Report - Cotton Situation Consultation Summoned by China Cotton Association

On 28th November, China Cotton Association held CCA Pre-alarm System Expert Consultation, which was participated by National Development and Reform Commission, Ministry of Finance, Ministry of Industry and Information of Technology, Ministry of Commerce, Ministry of Railways, National Bureau of Statistics, Customs Bureau, China Fibre Inspection Bureau, Agriculture Development Bank of China, China Cotton Textile Industry Association, China Chamber of Commerce for Import & Export of Textiles and some representatives from CCA members in Beijing. The experts agreed that the cotton yield this season was getting clear, statistics of textile industry recovered slightly in recent two months, though the outlook of next year was not promising. Supported by reserve, domestic cotton market was stable generally, the seed cotton procurement processed fast with steady price. Reserve cotton currently challenged warehouse capacity, the price gap between domestic and international enlarged, bringing more difficulty for textiles. The general balance sheet of cotton was studied, under the principle of consideration on the whole industry chain and stabilizing the market expectation.

By the end of November, cotton harvest nationwide has generally finished, and seed cotton procurement also came to later phase, with reducing high quality cotton available in the market. In Yellow River region, the price climbed slightly encouraged by the grade five lint reserves; while in Xinjiang, the price declined and more ginners retreated from the market due to degraded quality and tight warehouse; therefore, the average procurement price decreased slightly nationwide. According to survey by CCA cotton processing industry branch, last week (26th /30th November), weekly average procurement price nationwide for type 328 was 8.39 Yuan per kilo, and 0.03 Yuan lower over the week. The market transaction improved with active growers and ginners. The reserve trade for 2012/13 season has already around half of the project output. By the 30th November, the cumulative volume for reserve was 3.484 million ton, 1,877,520 ton from Xinjiang for around 70%; and 1,081,930 ton from inland; and 524,510 ton by key enterprises. The top three provinces in inland were Hubei by 8.0%, Shandong by 7.6% and Hebei by 4.8%. Up to date, cumulative reserve release by PCC of Xinjiang reached 33,110 ton.

Domestic cotton spot and futures continued to rise, for scarce resource available in market with reserve trade the only focus. ZCE cotton futures nearby contract CF301 settled at 19,850 Yuan per ton, 55 Yuan up over the week; CNCE nearby contract MA1212 had average settlement price of 19,160 Yuan per ton, 191 Yuan up over the week. CC Index328 settled at 18,918 Yuan per ton, 70 Yuan up over the week.

At the same time, FC Index settled at 84.32 cent per pound, which was 13,572 Yuan per ton under 1% tariff, 5,346 Yuan lower over domestic equivalent; and 14,512 Yuan per ton under sliding duties, 4,406 Yuan lower over the domestic equivalent.