Consignment trade provides between 200,000 to 400,000 MT of cotton in China's bonded warehouses. The stocks-to-use ratio remains below 20 percent.
The newly published China Cotton Association Cotton Trade Rules (CCA Cotton Trade Rules) are to replace the “China Textile Trade Rules”, and are expected to facilitate cotton trade.
Production
Overview - China's cotton production for MY06/07 is forecast at 6.05 MMT, up by 6.1 percent from the estimated 5.7 MMT for MY05/06.
This is in response to relatively high cotton prices since the harvest of the 2005 crop, and better profits received by cotton farmers. As a result, cotton planted area is forecast to rise to 5.4 MHA or 6.7 percent higher than the 5.06 MHA for MY05/06.
Yields for MY06/07 are forecast at an identical level of 1.12 MT per hectare in MY05/06, which is higher than the recent historical average.
Consumption
China's cotton consumption for MY06/07 is forecast at 10.2 MMT, 8 percent more than the revised estimate of 9.45 MMT for MY05/06.
This increase is driven by the high growth of domestic textile consumption as a result of consumers' greater disposable income and the high export growth of textile products resulting from the removal of quotas since the beginning of 2005.
Trade
Imports for MY06/07 are forecast at 4.1 MMT. This is only 2.5 percent higher than the estimated 4 MMT imports for MY05/06, which grew significantly over the previous year.
This huge increase for MY05/06 has been driven by the combination of high consumption growth as a result of China's rapidly expanding textile industry and reduced domestic production due to 11 percent less area planted to cotton.
Imports for MY06/07 are forecast to remain high at 4.1 MMT, chiefly due to the continued growth of yarn production.
marketing@alchempro.com
