Chinese Cotton Market Outlook From Inspection And Ginning Volumes

Market Intelligence

Chinese Cotton Market Outlook From Inspection And Ginning Volumes

By January 8, 2017, the inspection volumes of 2016/17 cotton nationwide represented 17.10 million bales, about 3.87 million tons. About 3.89 million tons and 88kt of cotton have been ginned in Xinjiang and in inland respectively. The inspection volumes of new cotton in Xinjiang witnessed obvious changes.

In 2016/17 season, arrivals of new cotton in Xinjiang showed two features. One is the slow arrival. In 2015/16 season, inspection volumes surged in October, 2015, slowed down in November and plunged in December. In 2016, the arrival was slower than corresponding period of last year. Inspection in October even went down, moved up obviously in November and reached the summit in December. Data for January this season was calculated till January 8, so the data is expected to be higher. The other is the noticeable volume in non-XPCC (Xinjiang Production and Construction Corps) regions in Xinjiang.

In Xinjiang, the inspection volumes outside XPCC was much higher than corresponding period of last year and in other provinces, the volumes decreased much year on year. For the expected volumes in 2016/17, the data is calculated based on the proportion in 2015/16 season. There will be some differences, but the quantity can reflect some situation.

The situation in inland was poor. Except Shandong and Hebei, no inspection volumes were seen already in January. The volumes are quiet small this season.

For ginning volumes, the quantity has reached 3.89 million tons in Xinjiang by January 8, including 1.268 million tons from XPCC. The output in Xinjiang is expected to exceed 4 million tons in 20116/17 season, or up to 4.10 million tons. In January 2017, inspection volumes in Shandong and Hebei increase noticeably, while other provinces see no upswing. So the output in inland may total 0.30-0.40 million tons. Therefore, the cotton output nationwide is projected at 4.40-4.50 million tons in 2016/17 season, up somewhat compared to last season.

In 2016/17 season, the arrival of new cotton is late and the quantity in late period is large, so with higher output as expected and the coming state cotton auction in March, the consumption of new cotton may be longer. By December, about 1.05 million tons of cotton is transported from Xinjiang to inland. If the Xinjiang output is around 4.10 million tons, the consumption in Xinjiang itself may be around 1.00 million tons, then the rest of 2.00 million tons is likely to be transported after January. With the quantity of 2 million tons and state reserved cotton, supply may be sufficient during the early period of the auction. For late market, it depends on downstream demand and supply in late 2016/17 season.