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Insight | Time:Jan 11 2017 11:08AM
Chinese cotton market outlook from inspection and ginning volumes
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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 change.

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 much slower than corresponding period of last year. The inspection in October even went down, moved up obviously in November and reached the summit in December. The data of 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.
Inspection volumes in 2015/16 and 2016/17 seasons
Unit: KT 2015/16 season Ration in total inspection 2016/17 Expected data
China 3411.14 95.0% 3873.59 4076
non-XPCC 1790.93 96.7% 2508.26 2593
XPCC 1410.51 99.4% 1253.39 1261
Shandong 90.13 57.7% 55.70 97
Hebei 56.54 65.7% 28.17 43
Gansu 24.91 83.1% 13.91 17
Hubei 15.54 98.0% 8.01 8
Anhui 10.15 85.5% 1.55 2
Jiangsu 5.68 64.9% 3.55 5
Hunan 3.74 76.1% 0.63 1
Tianjin 1.55 76.7% 0.43 1
Zhejiang 0.84 54.2%    
Jiangxi 0.37 90%    
Shanxi 0.25 100%    

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 Jan 8, including 1.268 million tons from XPCC.
Ginning volumes of new cotton in Xinjiang by Jan 8, 2017 (Unit: ton)
non-XPCC Ginning volumes non-XPCC Ginning volumes
Aksu 752294 Ili 1164
Kashgar 469236 Companies under XPCC 176795
Bayingol Mongolian 363597 XPCC
Tarbagatay 299549 8th Division 420618
Kuytun 132479 1st Division 293781
Changji 131458 7th Division 148693
Bozhou 125904 3rd Division 115312
Kizilsu Kirghiz 65514 6th Division 85480
Hami 36645 2nd Division 81695
Turpan 30600 5th Division 79890
Karamay 25607 13th Division 33658
Hetian 12444 4th Division 7402
Urmqi 2785 14th Division 1393
Total ginning volumes in Xinjiang reach 3.89mln tons, including 1.27mln tons from XPCC abd 2.62mln tons from non-XPCC.

Combined with table 1 and table 2, the output in Xinjiang is expected to exceed 4.00 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 2.00 million tons and the state reserved cotton, the supply may be sufficient in the early period of the auction, weighing on the market price. For late market, it depends on the downstream demand and the supply in late 2016/17 season.
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