April 25, 2012
Sandstorm hits China's cotton crops with small impact
Cotton crops just planted in China's northwestern province of Xinjiang have been hit by a heavy sandstorm over the past week, although there will only be limited impact on the 2012 harvest, analysts said on Monday (Apr 23).
China is the world's largest producer and consumer of cotton. A fall in its domestic supply, which rose 11% last year to 6.6 million tonnes, could hoist imports higher and roil world prices.
Production in 2012 will suffer minimal damage from the sandstorm, a regular event at this time of year, as it arrived in the middle of planting season, leaving farmers enough time to re-plant ahead of harvest in September, analysts said.
"The latest time for farmers to re-plant cotton crops is by the end of May, so there is enough time for them to plant more and make up for the damage," said Jian Jinglei, a cotton analyst with Shanghai CIFCO Futures.
"The market will not be worried about weather disruptions now but will only be concerned if bad weather hits when the crop is already maturing or if it is close to harvest season."
The most active cotton futures on the Zhengzhou Commodity Exchange were little changed last week and were down 0.8% on Monday to settle at RMB21,235 (US$3,400) a tonne.
Domestic media said the total area hit by the sandstorms reached several hundred thousand mu - an area considered small by analysts since Xinjiang has total cotton planting acreage of more than 20 million mu (1.3 million hectares).
"Even if the total acreage hit was 100,000 mu, that would only translate into 10,000 tonnes of cotton output. It's a small fraction of Xinjiang's output of roughly 3.5 million tonnes," said Zhang Wenming, manager of cotton business at Wonder Futures.
Others said local farming co-operatives also tend to exaggerate the area damaged in a bid for higher government subsidies.
China's cotton imports rose 18% to 3.36 million tonnes last year and are set to climb higher in 2012. Total shipments surged 84% from a year ago to reach 1.57 million tonnes in the first quarter this year.
