Cotton

Due to low price in 2008, the planting area of cotton shrank in 2009 and the output drops. But the exports volume of Chinese textiles has been increased substantially since March 2010 that causes the shortage of material supply. According to Customs statistics: Chinese textiles export increases for seven consecutive months, and the apparel export increases for three consecutive months. The profit of textile industry reaches a historic record high. That raises the prices of yarn and cotton. In June 2010, Chinese cotton price averaged RMB 17884/ton, up 5.81% compared with the last month, and up 39.91% on a year-on-year basis. At present, the domestic cotton price has approached to the high level in the year of 2003/2004, increased by 58% on a year-on-year basis.

 

The shortage of domestic supply drives cotton import substantially rising. The import price also reaches a new record. The supply in international market even show insufficient. The prices of international textiles also go up.

 

In the second half of 2010, there are some uncertain factors in Chinese textile industry. At present, the inventory can ensure the supply until new cotton launches to market. But due to no substantial increase of planting area, the shortage will still exist and therefore needs import.

 

The supply will increase after new cotton harvests and launches to market. Also, considering the planting area increases in U.S. and India will approve cotton export, international cotton prices have greatly fallen. Cotton price in China can be predicted to fall but slightly.

 

Overall, Chinese cotton planting area approximately reaches 5,430,000 hectares in 2010. Yield per unit could reach 1.38 ton/hectare, a new historic record. The total production is estimated to 7.479 million tons. Consumption demand is about 11.136 million tons. Because of rapid growth of textiles export and rising domestic demand for textiles, the prices of cotton and textiles are presumed to remain a high level, about RMB 15500-16600/ ton within the year.

 

 

Eggs

BOABC predicts egg price will rise substantially in 2010. In the third week of July, the producer’s egg price averaged RMB6.97/kg in China, up 10% over the last week and up 19% on the year-on-year basis, enabling egg farms a profit of RMB 0.7/kg. Specifically, the producer’s egg price moved up 14% in Beijing, 10% in Hebei and 3% in Guangdong over the last week and 24%, 23% and 13% respectively on the year-on-year basis.

 

Impacted by excessive supply and rising cost, the average loss of raising egg-laying hens reached RMB 0.37/kg in 2009. Although the egg layer inventory dropped to the bottom in the second half of 2009, low consumption still caused low price. However, the price is soaring in 2010, which is attributable to the reduction of egg layer inventory, high feed price and hot weather.

 

BOABC presumes that egg price may stay at the current level or keep going north in the short run，approximately up 10%-20%.