Production
The cotton production will set a new history record in the cotton year 2005/2006. According to the investigation of China National Statistics Bureau, the cotton planting area in China comes to 80 million mu with an increase of 4 million mu , 5% up compared with the last cotton year and the production is expected to reach a new record of 6.3 million tons, up by 10.5% . Xinjiang’s cotton output will also reach a new history record of 2.1 million tons. The new cotton’s quality will be better than previous years because of high lint and low water.
Price
Presently the cotton price has been falling down. With the increasing of new cotton’s picking, procurement work also launches in an all-round way and large-scale cotton enterprises begin to enter the market to purchase. The loan release of Agricultural Development Bank has relieved the fund pressure, but some enterprises’ difficulty to sell cotton because of the relatively high previous purchasing price and the depositing of social fund has influenced the purchase follow-up.
As the new cotton entering market intently and the clearness of market situation, the cotton price fall-back obviously. The China Cotton Index at September 30 was13,624 yuan per ton, had dropped by 446 yuan per ton compared with September 1. The month average price was 13973 yuan per ton in September, dropped by 41 yuan per ton compared with August. Because the price of domestic cotton dropped continuously, the price advantage of overseas cotton decreased obviously even disappeared already. The price of low grade imported cotton (sliding scale duty) has been higher than domestic cotton at the same grade, The price difference of high grade cotton is dwindling too.
Demand
1, The yarn output increased. In September 2006, the yarn output of the mills above designated size rose by only 0.37% against last month to 1.5856 million tons and increased by 27.71% year-on-year.
The yarn production in the first nine months in 2006 increased by 25.6% to 12.408 million tons compared with the same time last year.
2, The textile production and clothing export decreased slightly. In September 2006, the exports of China textile production and clothing are about US.188 billion, down by 6.5% of US.002 billion against last month, decreased by 21.16%year-on-year. Hereinto, the exports of textiles and yarn are US.365 billion, up 14.18% year-on-year; the exports of clothing and accessory are US.823 billion, up by 24.5% year-on-year.
The State Macro Policy
1, 700,000 tons of additional quotas have been allocated to the mills before the National Day. This kind of quota will be valid till December 31, 2006 and the duty will be "sliding scale duty".
2, The National Development and Reform Commission have released the notice about the quantity of imported cotton tariff-rated quota (TRQ) for 2007, the applied condition and the distribution principle. The imported cotton amount TRQ will be 894,000 tons in 2007, and 33% of TRQ will be for state-owned companies.
3, The Ministry of Finance, the National Development and Reform Commission, the Ministry of Commerce, the General Administration of Customs and the State Administration jointly released a notice to adjust the export tax rebate rate of some export commodities, the export tax rebate rate for textile products will decrease from 13%to 11%. The cost of textile and clothes export enterprise continue increasing, in addition the factors such as RMB appreciating, rising raw material costs and human cost, these will make a certain affection on the annual cotton demand.
