Cotton Market Review & Outlook--China (2003-2004)

[Key Words] Cotton Review Outlook

Research Background

China is the world’s largest cotton producer and consumer and its domestic cotton demand and supply has a great influence on the world market. At present, China has become a wholly cotton importer from a cotton exporter in 1999/2000, the cotton imports on up greatly trend. Therefore, each of world influential¹ cotton producing regions, cotton producers, international traders, futures² companies, textile enterprises and so on is concerned about the changes in China’s cotton market.
Even though lots of specialists and research institutions had expected on the trend of China cotton market in 2003, but to our surprises, great changes have taken place in the nation’s cotton market. For example, in October the beginning of the new cotton harvest and appear on the market, the cotton market price rose up 22% from September, up by 57% than the corresponding period of 2002.
In fact, in the recent years the government has issued a series of policies. China cotton market became more and more open, the cotton price was decided³ by the balance of the supply and demand. The government lowered the power gradually on intervening in the price. During the process of opening, the imperfect of China cotton market made the market price uncontrollable. Therefore, the changes in China’s cotton market influenced the price in the international cotton market at the same time.

China cotton manufacture increased with great margin⁴ in 2003, but the rainy days and lower temperature in the Yellow River Valley and the flood disaster in the Yangtze River impacted seriously on China cotton production. This year, the good exports of China textile stimulated⁵ the spinning abilities increasing rapidly, the cotton used in spinning accounting⁶ for over 95% of cotton consumption increased greatly. Cotton consumption increased promptly⁷, the contradictions of China cotton supply and demand was obvious gradually. People concerned are anxious to know how much cotton China will produce in next year, how big the stock is, what quantity the nation intended to import, etc. China cotton industry has become the world focus again.

China government began to carry out the policy of "controlled spindle and restricted production" from 1998 to 1999. In the September of 1999, the government began to reform the cotton circulating system until 2003. In the light of cotton and textile industry, China government will take what kind of policy? How about Chinese cotton farmers? The impact on the textile industry will be? The cotton price trend in the future will go? What’s the impact on the international market?

By employing substantial figures from various channels such as official or not and BOABC databank, as a special consultant⁸ corporation monitored China Agriculture Market for a long time, we will analyze⁹ the changes of China cotton market, government policies, the imports and exports and the manufacture and consumption in 2003. The study reveals the trend of changes in the nation’s cotton market, the changes in policies on imports and exports and the production and disappearance¹⁰ in 2004. Readers may find answers to the questions that they are most interested in.

Table of Contents
CHAPTER ONE
China Cotton Market Review In 2003
1. Cotton Production
1.1 Cotton Producing Areas On Resumptively Increase
1.1.1 The Most Increased Margin Of Planting Areas In The Yellow River Valley
1.1.2 The Planting Areas with Obvious Increase In The Yangtze River Valley
1.1.3 The Planting Areas with Obvious Increase In Xinjiang
1.2 The Bad Weather Made The Cotton Yield Fall With Great Margin
1.2.1 Serious Loss In The Yellow River Valley As Rainy Days
1.2.2 The Production Reduced In The Yangtze River Valley
1.2.3 Less Weather Impact In Xinjiang Cotton Areas
1.3 Slight Increase Cotton Production Than Last Year
1.3.1 The Total Production In The Yellow River Valley Lower Than Last Year
1.3.2 The Cotton Yield Decreased In The Yangtze River Valley Canceling The Rising Areas
1.3.3The Total Cotton Production Lower Than Last Year
1.3.4 The Total Production Higher Than Last Year In Xinjiang
1.4 The Insect-Resist Cotton Areas Continued To Enlarge
1.5 The Cotton Quality Is Not Enough Good At Large
1.6 The Farmers Income Of Planting Cotton Increased

2. China Cotton Consumption Continued To Rise
2.1 The Cotton Spinning Consumption Increased Greatly
2.1.1 China Textile Costume Exports On Rising Trend
2.1.2 More Spindles Improved Cotton Consumption
2.1.3 Little Impact On Textile Production As SARS
2.1.4 Government Supports On Textile Industry
2.2 Cotton For Wadding Or Other Cotton Consumption Keep Stable

3. Cotton Circulation
3.1 Cotton Circulation System Revolution Went On Operating
3.2 The Main Cotton Purchasers Became Many-Faceted
3.3 The Main Cotton Purchasers Were Cotton & Hemp¹¹ Companies Of Supply And Marketing¹² System
3.4 The Policies Of Providing A Loan For Cotton Purchase
3.5 Cotton Purchase Price Increased Greatly
3.6 The Nation Continued To Undersell The Old Commercial Cotton And The Stocks
3.7 Cotton Stocks Has Fallen To The Most Lowest Level

4. Cotton Imports And Exports
4.1 Government Policies On Cotton Imports And Exports
4.2 China Imported Cotton With Many Times In 2003
4.3 China Cotton Exports Decreased

CHAPTER TWO
China Cotton Outlook In 2004
1. China Cotton Production Will Continue To Rise With Great Margin
1.1 The Cotton Production In The Yellow River Valley Will Continue To Increase
1.2 The Cotton Production In The Yangtze River Valley
1.3 The Cotton Production In Xinjiang

2. China Cotton Consumption Will Continue To Keep Rising
2.1 China Cotton Textile Consumption Will Continue To Increase Slightly
2.2 China Wadding Or The Other Cotton Consumption Will Be Impossible To Change A Lot

3. Cotton Circulation
3.1 The Cotton Circulation System Revolution Go On Running
3.2 The Policies Of Providing A Loan From Agro-Development Bank Will Quit Gradually
3.3 Cotton Futures Will Go On The Market
3.4 Cotton Price Will Be Possible To Fall
3.5 The Cotton Stocks Will Keep At The Lower Level

4. Cotton Imports And Exports
4.1 Government Is Possible To Increase the Imported Quota¹³ and Encourage the Cotton Imports
4.2 Cotton Imports Will Continue To Increase
4.3 China Exported Cotton Quantities Will Decrease

APPENDIX

Table1 Balance Sheet Of China’s Cotton Supply And Demand
Table1.1 China’s Cotton Acreage In Major Provinces, 1995~2003
Table1.2 China’s Cotton Yield In Major Provinces, 1995~2003
Table1.3 China’s Cotton Production In Major Provinces, 1995~2003
Table1.4 Estimates Of Bt-Cotton Acreage In China, 2000-2003
Table1.5 Average Per Hectare Cotton Planting Benefit And Cost In China, 1997/98-2003/04
Table1.6 China’s Cotton Planting Benefits & Cost In Major Provinces, 2002/03
Table2 Changes Of China Cotton Total Consumption In 1990~2003
Table2.1 China’s Cotton Used In Textile Industry, 1990~2003
Table2.2 China’s Cotton Used In Textile Industry By Month, 2002-2003
Table2.3 China Textile Costume Imports &Exports By Month, 2003
Table2.4 China’s Cotton Used In Other, 1990~20003
Table3.1 The Cotton Average Purchase Price By Province In 1995~2003
Table3.2 The Cotton And Hemp Enterprises Purchase Cotton Quantity In 1999~2003
Table3.3 The Proportion Changes Of Cotton And Hemp Enterprises Purchase Quantity
Table3.4 The Undersold Old Cotton Quantity And Average Price From The Nation In The Recent Years
Table3.5 The Cotton Stocks At The End Of 1995-2004
Table3.6 The Standard Cotton Average Price Compared With The International Price In The Recent Years
Table4.1 China’s Cotton Imports By Country Origins In 1992~2003
Table4.2 China’s Cotton Exports By Destinations In 1992~2003
Table4.3 China Cotton Imports By Country In 2003
Table4.4 China Cotton Exports By Country In 2003
Table4.5 China Cotton Imports By Port In 2003
Table4.6 China’s Cotton Exports By Major Ports, Jan. ~ Dec., 2003
Table4.7 Average Cotton Imports Price (CIF) 1997-2003
Table4.8 Average Cotton Exports Price (FOB) 1997-2003