How can the XPCC cotton industry develop with high quality? This forum discusses the value of futures “propellers”

It is now the beginning of the new cotton year. As a major “main force” of domestically produced cotton, what is the current development situation of XPCC cotton? What is XPCC’s strategy for implementing highquality development? What value do futures tools play in serving the stable and healthy development of the cotton-related industry?

In order to strengthen the risk management capabilities of the Corps’ cotton-related enterprises, further implement the spirit of the document “Guiding Opinions on Promoting the Healthy Development of the Corps’ Futures Industry” (Xinbingbanfa [2021 No. 46]), and effectively improve the quality of the Corps’ cotton, September 15 On July 1, Zhengzhou Commodity Exchange (hereinafter referred to as “Zhengzhou Commodity Exchange”) jointly organized the “Corporation State-owned Assets Supervision and Administration Commission, the Corps Development and Reform Commission, the Corps Financial Bureau and the Corps Supply and Marketing Cooperative” to jointly organize the “Response to the situation and open a new game – the Corps Cotton Industry High-Quality Development Forum” .

The forum was set up in the main venue in Urumqi and in Zhengzhou, and was conducted via online live broadcast. The above topics were discussed. Representatives from relevant departments of the Corps, major cotton growers, as well as rural cooperatives, ginning enterprises, traders and delivery warehouses attended the meeting.

Take multiple measures

Promote the high-quality development of the XPCC cotton industry

According to reports, the Xinjiang Corps currently has 110 regiment farms growing cotton. The cotton industry is the pillar industry and advantageous industry of the Corps’ agriculture. It occupies a decisive position in the Corps’ economy. It is of great significance to ensure the income of cotton farmers.

“In recent years, with the extensive participation and support of relevant departments of the Zhengzhou Commercial Exchange and all parties in society, the futures market has achieved positive results in promoting high-quality economic development, serving Xinjiang’s key and characteristic industries, and promoting stable and increased income for farmers. .” Fan Zhe, deputy director of the Xinjiang Xinjiang Local Financial Supervision and Administration Bureau, said that Xinjiang’s cotton and other specialty agricultural products play an important role in the national poverty alleviation strategy and Xinjiang’s economy and society. Since the beginning of this year, there has been great uncertainty in the evolution of the global epidemic, the international environment has become increasingly complex, some bulk commodities and various financial prices have intensified, and the need for risk management in the real economy has become increasingly prominent. . In the context of the country’s strong advocacy of guaranteed supply and stable prices, the futures market can not only help industrytransform and upgrade and stabilize agricultural production returns, but can also help farmers avoid the risk of price fluctuations of agricultural products. Protecting the interests of farmers and serving rural revitalization fully demonstrates the important role of the futures market in serving the real economy.

Cui Xinwu, deputy director of the Xinjiang Production and Construction Corps Supply and Marketing Cooperative Federation, said that the Corps proposed in the cotton quality improvement action work plan issued in March this year that in 2021, the Corps’ cotton quality will be significantly improved, and the main quality indicators are generally higher than the national average By the end of the “14th Five-Year Plan”, brand influence and market competitiveness will be further enhanced.

Cui Xinwu further introduced that the Corps has started from cotton seed management services, carried out green development subsidy pilots, fully implemented “one main and two auxiliary”, strict quality monitoring and harvest management, standardized acquisition and processing management, established an interest linkage mechanism, and accelerated the establishment of The quality traceability system, special rectification, and improvement of safeguard measures will focus on improving the quality of the Corps’ cotton, improving its scientific and technological content, enhancing its safeguard capabilities, and striving to build a national high-quality cotton production base, thereby laying a solid foundation for high-quality development and promoting the quality improvement and growth of the cotton industry. efficiency and enhance competitiveness.

“Faced with the turbulent international situation, the complex surrounding environment and the arduous tasks of reform, development and stability, Xinjiang’s state-owned cotton-related enterprises must continue to strengthen research on the cotton futures market and actively explore the Xinjiang Corps’ An effective way for cotton-related entities to use the cotton futures market.” Jiang Yu, deputy director of the Property Rights Department of the State-owned Assets Supervision and Administration Commission of the XPCC, said at the forum that cotton processing and circulation enterprises should enhance brand awareness, accelerate product innovation, service innovation, business model innovation, and continuously expand open scope and level, allowing high-quality textiles and clothing to go out, bringing in high-quality resources, advanced technology and modern concepts, and promoting the high-quality development of the XPCC cotton industry with high-level openness, and providing The Corps contributes to the development of the national and world cotton industries.

Cotton futures

It has become a “stabilizer” for the healthy development of the industry

In 2021, affected by factors such as imported inflation and the impact of the epidemic, cotton price volatility has increased, with the annual price volatility reaching 24%, a year-on-year increase of 20.6 percentage points, and market risks have increased significantly.

Against this background, cotton futures functions efficiently and becomes a “stabilizer” and “propeller” for the healthy development of the industry, which is mainly reflected in three aspects.

First, price discovery is accurate. The correlation between futures and current prices is as high as 98%, providing an accurate “barometer” for participants in the cotton industry chain to judge the market situation.

Second, hedging is stable. According to statistics, through hedging in the futures market, 98.3% of the risk of cotton spot price fluctuations can be avoided, effectively reducing the operating risks of cotton-related enterprises. Driven by this, the cumulative warehouse receipt registration volume of cotton futures has increased from 572,000 tons in 2017/2018 to 1.92 million tons in 2019/2020. About 32% of the country’s cotton has passedThe futures market realizes value preservation and sales.

Third, the market structure is excellent. In recent years, the proportion of positions held by legal person customers in cotton futures has continued to increase, participants have become increasingly institutionalized, large-scale and professional, and the market structure has become more reasonable. In the variety function evaluation ranking organized by the China Securities Regulatory Commission in the past two years, cotton futures have ranked among the best.

It is understood that relying on cotton futures, Zhengzhou Commodity Exchange continues to deeply cultivate the cotton industry and expand the comprehensive effectiveness of the futures market in serving the high-quality development of the cotton industry. Since 2016, 28 cotton “insurance + futures” pilot projects have been carried out; the United Agricultural Development Bank has carried out the “value-preserving loan” business of futures warehouse receipts, exploring the use of bank loans for cotton to enter the futures market for hedging and delivery. In the 2019/2020 cotton year, involving cotton 90,000 tons, with a capital of about 1 billion yuan, opening up the bank-futures connection path.

Carry out warehouse receipt trading business on the Zhengzhou Commercial Exchange’s over-the-counter comprehensive business platform, and introduce commercial banks to provide financing loans to cotton operating companies. Since 2019, it has provided acquisition funds of 14.434 billion yuan to 72 cotton-related companies, broadening the scope of Financing options for cotton enterprises.

In addition, the Zhengzhou Commodity Exchange also held more than 60 market activities such as the China International Cotton Conference; selected 9 cotton-related companies such as China Cotton Group and China Textile Group as industrial bases to set industry benchmarks and spread the positive energy of futures.

Wang Xiaoming, deputy general manager of Zhengzhou Commercial Exchange, said that in the next step, Zhengzhou Commercial Exchange will be more proactive, comprehensively optimize and enhance the functions of cotton futures, and promote the high-quality development of the cotton industry, especially the Xingtuan cotton industry. The first is to continue to optimize cotton and cotton yarn futures rules, so that high-quality institutional supply becomes a new driving force for the high-quality development of the cotton industry. The second is to explore the internationalization path of cotton futures and study the methods of opening up cotton futures from multiple dimensions and perspectives. The third is to closely follow the market needs, optimize and adjust the layout of delivery warehouses, so that cotton futures can benefit more cotton-related enterprises in a wider area and within a larger scope. The fourth is to maintain investment in the cotton “insurance + futures” pilot and launch two more projects in Maigaiti and Tumshuk in 2021. The fifth is to increase the construction of over-the-counter platforms, starting from the China Cotton Warehouse Warrant Purchase and Sales Zone, enriching the functions of the off-site platform, prospering the development of the over-the-counter market, and contributing more to expanding sales channels, reducing financing costs, and enriching risk control methods for cotton-related enterprises. Multiple futures power. Sixth, the cotton futures market will be deeply cultivated, the organization of training and research activities will be intensified, the interaction between capital and industry will be enhanced, and the vitality of the industry will be effectively enhanced.

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