China Mills Were Active Buyers of Cotton in February

The NCMMS March survey of mill inventories and purchases revealed mills have been active buyers of cotton over the past 30 days. 81% of all mills surveyed indicated they plan to purchase cotton this month; this is up 19% from February. The average mill inventory equals 39.6 days of consumption, which is 15.3% higher than a year ago. The total level of industrial stocks is down 8.8% from the previous year. Unsold inventories of fabric are now at 36.7 days, down 8.9 days from February. Unsold yarn stocks equal 26.3 days of output, which is near unchanged from last month.

Any Chinese farmer still holding seed cotton is being rewarded with a major price increase. In Shandong, seed cotton prices have reached their highest level of the season at 5.20 to 5.66 yuan per kilogram. The government is continuing to make grain prices more attractive to farmers. The minimum procurement price for wheat has been raised for the 3rd time this season by 40 yuan per ton. So far in 2009, the average wheat procurement price has rallied sharply along with some gains in wholesale and retail prices.