China has delegated review and approval of the quota for cotton processing capacity to the provincial level in a move to streamline administration, according to an announcement jointly released on Friday [9 October 2015] by the National Development and Reform Commission, the General Administration of Quality Supervision, Inspection and Quarantine, and the State Administration for Industry and Commerce…Full Article: Xinhua Finance Oct 2015

Key Point

  • The NDRC hopes to streamline the country’s cotton processing industry by avoiding excessive investment and overcapacity.

ChinaAg Comments

  • In September 2015, the President of the China National Textile & Apparel Council (CNTAC) needs 3.5 million MTs of “high quality” cotton.
  • From July to August 2015, according to the NDRC, China attempted to auction 330,000 MTs of 2011’s cotton crop at CNY 13,200 (~US$2,125) per MT, 470,000 MTs of 2012’s crop at CNY 14,200 (~US$2,286) per MT, and 200,000 MTs of 2012’s imports (not domestic) at CNY 15,500 (~US$2,495) per MT.
  • In June 2015, China’s NDRC announced plans to sell off the country’s cotton stockpile (~10 million MTs as of mid-2105). According to an NDRC official, it will take China several years to sell and consume its current cotton stockpile.
  • In 2014, Chinese cotton reserves reached 11 million MTs, equal to roughly half of global cotton trade volumes.
  • In September 2014, China announced that would not increase its cotton import quota beyond 894,000 MTs for 2015. At the same time, the Chinese domestic price for ginned cotton totaled CNY 14,000 (~US$ 2,284.50) per metric ton. At the same, in the US futures markets, the price of ginned cotton stands at approximately CNY 11,800 (~US$1,925.50) per MT.
  • In April 2014, China’s NDRC announced it would abolish the minimum purchase price for cotton and instead would set CNY 19,800 (~US$3,224) per MT as the reference price. If the free market price falls below the reference price, then farmers will receive a subsidy based on the quantity of cotton sold in February 2015.
  • From 2012 to 2013, China’s cotton output declined from 6.8 million MTs to 6.2 million MTs. In 2013, Xinjiang accounted 56% or 3.5 million MTs of Chinese cotton production. The next largest producer was Shandong which accounted for 10% (620,961 MTs of output).
  • In mid-2011, developed market economies (e.g. countries) began curtailing their imports of Chinese-made clothing and yarn products.

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