China Cotton Association: Cotton Imports Increased Significantly, Market Supply Was Sufficient

In the first quarter, China's national economy continued to rebound and made a good start. In March, the domestic cotton market was in sufficient supply, the import volume continued to increase significantly, and the cotton price fluctuated downward. Affected by low temperature and other factors, orders were postponed in spring, domestic market demand was insufficient, textile and clothing exports were less than expected, and the peak season was not prosperous, so enterprises were cautious in purchasing raw materials. China Cotton Association predicted that in 2023/24, the national cotton output will be 5.877 million tons, down 11.3% year on year; Cotton imports reached 2.66 million tons, up 86.7% year on year, 560000 tons higher than the previous period; Consumption was 7.9 million tons, up 4% year on year; The ending inventory was adjusted to 9.356 million tons, up 6.9% year on year. Since late March, as the weather has gradually warmed up, cotton planting has been carried out in succession. According to the survey of China Cotton Association, the intended area of cotton planting nationwide is 41.12 million mu, down 1.5% year on year, which is the same as the previous period.

1、 Increase in finished product inventory of textile enterprises

In March, new orders of textile enterprises were still small, the characteristics of traditional peak season were not obvious, the growth momentum of downstream consumption was insufficient, and sales were sluggish. According to the survey, the yarn output of the sample enterprises in March increased by 32.7% month on month, down 0.9% year on year; The yarn sales rate was 72%, down 1 percentage point month on month; The yarn inventory was 23.15 days, 4.47 days more than the previous month.

Exports of textiles and clothing fell short of expectations, foreign trade demand did not rebound on a large scale, and the amount of exports declined year-on-year. According to the data from the General Administration of Customs, China's textile and clothing exports in March totaled 20.81 billion US dollars, up 17.2% month on month and down 21.1% year on year; In the first quarter of 2024, the cumulative export of textiles and clothing reached US $65.91 billion, up 2.0% year on year.

2、 Adequate supply of cotton resources Commercial stocks declined

The supply of cotton resources across the country is sufficient, and the domestic cotton price fluctuates slightly. Textile enterprises purchase cotton in an appropriate amount, mainly to supplement the stock in case of rigid demand. The commercial inventory decreases and the industrial inventory increases slightly. As of March 31, the national cotton commercial inventory was 4.859 million tons, down 507000 tons month on month, or 9.5%, lower than 145000 tons in the same period last year; During the same period, the cotton industrial inventory of textile enterprises in the warehouse was 900000 tons, an increase of 11000 tons month on month and 204000 tons year on year. With the transfer of Xinjiang cotton and the increase of demand for picking up goods, the total volume of cotton shipments to Xinjiang has increased significantly. In the same month, the volume of Xinjiang cotton professional warehouse shipments to Xinjiang was 406000 tons, an increase of 262000 tons month on month, lower than 362000 tons in the same period last year.

3、 Increase in cotton imports

Since 2023/24, China's cotton imports have increased significantly. According to customs data, in March, China imported 397000 tons of cotton, an increase of 34.7% month on month and 4.5 times year-on-year, the highest import volume in the past three years. Among them, Brazilian cotton ranked first, accounting for 42%; The United States ranked second, accounting for 38%. The share of general trade still ranks first, accounting for nearly 50%. In the first quarter of 2024, China will import 1.037 million tons of cotton, an increase of 2.5 times year-on-year. In the first seven months of 2023/24, a total of 2.13 million tons were imported, with a year-on-year increase of 1.5 times.

4、 Cotton prices at home and abroad fluctuated downward

In March, domestic demand for cotton was weak, and cotton prices showed a downward trend. In the international market, at the beginning of the month, due to the strong contracted export of American cotton, the price rose. At the end of the month, USDA announced that the area of American cotton intended to increase in 2024/25 year on year. At the same time, the expectation of the Federal Reserve to cut interest rates was postponed, the dollar index rose, and cotton prices fell mainly. The average monthly price of China's cotton price index (CCIndex3128B) was 17122 yuan/ton, up 15 yuan month on month, or 11.2% year on year. The monthly average price of Cotbook A index is 99.7 cents/pound, which is basically the same month on month, up 4.5% year on year, and the tariff price of 1% is 17394 yuan/ton, which is 272 yuan higher than the domestic cotton price.

5、 Cotton planting intention will decrease by 1.5% in 2024

In March, the China Cotton Association carried out the second survey of cotton planting intention in 2024, and the results showed that the area of cotton planting intention in the whole country decreased slightly. Supported by the target price policy, most cotton farmers in Xinjiang were still willing to continue to plant cotton. As some regions took the initiative to reduce the second best cotton fields, the area of cotton planting intention decreased slightly; The area of the Yangtze River basin continues to decline due to the poor comparative benefits of cotton planting and the inability to plant in a large scale; The Yellow River basin benefited from the high cotton price last year and the relatively stable income. Some farmers increased their planting area. In this survey, the intended area of cotton planting in China was 41.12 million mu, down 1.5% year on year, which was the same as the previous period. Among them, the area of interest in Xinjiang decreased by 1.5% year on year, 0.2 percentage points less than the previous period; The intended area of the Yangtze River Basin decreased by 6.7%, 4.5 percentage points more than that of the previous period; The intended area of the Yellow River basin increased by 2.5%, 0.8 percentage points less than that of the previous period.

(Source: China Cotton Association)