Tight supply has caused cotton prices to rise, and the dual-track cotton supply system may not be able to solve the urgent need
The soaring cotton prices have put pressure on downstream fabric companies, causing them to fall into a situation of “having no rice to cook”. During the National Day, Xinjiang cotton not only ushered in a surge in cotton prices, but also drove the entire cotton market to follow suit, thus touching the “nerves” of downstream fabric companies.
Cotton prices are on a “helicopter”
“After the replacement of old and new cotton, the cotton cost of fabric companies has increased by more than 2,000 yuan/ton compared with August.” Secretary-General of Henan Fabric Industry Association Li Jifeng recently revealed that the quoted price of Xinjiang’s hand-picked lint cotton has exceeded 16,000 yuan/ton, and the quoted price of Xinjiang’s machine-picked cotton has also reached 15,500 yuan/ton.
According to relevant inspection data, as of October 9, the purchase price of seed cotton in southern Xinjiang was about 7.6 yuan/kg. In Kuqa, Yuli and other places in Aksu, the high purchase price reached 8 yuan/kg. . Driven by cotton prices in Xinjiang, during the National Day, the price of seed cotton in the Yellow River Basin also reached 7.3 yuan/kg, an increase of 0.15 yuan/kg from before the holiday.
In the futures market, the main contract of Zheng cotton, CF1701, was as high as 15,700 yuan/ton on October 12, compared with about 12,000 yuan/ton in the same period last year, an increase of more than 30%.
In the view of Sun Kuanghua, a cotton analyst at Sun Business Society, Xinjiang cotton was launched late this year. When Xinjiang cotton was about to be launched, there was a rainy and windy season, which caused a certain impact on cotton growth. This is the main reason for the surge in cotton prices in Xinjiang.
It is understood that southern Xinjiang has been rainy and windy this year, and the Korla region of Xinjiang has recently suffered hail disasters. The National Meteorological Center recently predicted that the total cotton output this year will be 5.096 million tons, a decrease of 9.1%.
The launch of picked and hand-picked cotton was delayed by 7-10 days compared with previous years. After the end of the reserve cotton rotation, there was a short “empty window” in the market supply of cotton.
Supply and demand imbalance
In addition to climate factors, the soaring cotton price is also caused by the imbalance between supply and demand. The reporter learned during the interview that currently, there is relatively little cotton in the commercial circulation field, and the state reserve cotton is a large source of supplement.
However, the outflow speed of state-owned cotton is as slow as “squeezing toothpaste”, and the quantity is insufficient, which further causes fabric companies to rush for cotton, thus further pushing up cotton prices.
“Because textile companies and traders are definitely panicking about the future supply of Xinjiang cotton, there was a rush to buy Xinjiang cotton during the National Day.” Sun Kuanghua said in an interview with “China Industrial Economic News” “Listen” reporter said in an interview that since this year, the cotton rising channel has been opened, and cotton farmers have high psychological expectations for new cotton prices. At the same time, the cost of growing cotton this year has increased by 5%-8% compared with last year. In addition, there is a labor shortage in Xinjiang this year. Flower pickers from the mainland have increased the cost of picking flowers, which indirectly increases the cost of cotton.
At the same time, it is also definitely related to the quota restrictions on domestic cottonimport. It is understood that the domestic cotton quota is 892,000 tons. When cotton from the international market cannot enter and there are relatively few cotton resources in domestic commercial circulation, there will be tensions when fabric companies purchase cotton. Then��At this time, the state cotton reserve has become the main supplementary channel for cotton in the domestic market.
According to insiders of the China Cotton Industry Association, there is no problem with the cotton reserve system itself. Perhaps there is only a deviation in the implementation of the system. For example, the system plans to put in 50,000 tons of cotton every day. If it is insufficient, it will continue to increase the amount. However, the current actual amount is less than 30,000 tons per day, and sometimes even drops to 10,000 tons. In addition, when emptying the warehouse, due to space and manpower constraints, the warehouse arrival efficiency is low, which will also affect the release of reserve cotton.
Others, according to the reporter’s understanding, the continuous decrease in cotton planting output is also an important reason for the rise in cotton prices. According to the “Survey Report on China’s Cotton Actual Sowing Area” issued by relevant departments not long ago, in 2016, the country’s actual cotton sowing area was 43.851 million acres, a year-on-year decrease of 7.337 million acres, a decrease of 14.3%. Among them, the Yellow River Basin dropped by 24.7% year-on-year, the Yangtze River Basin dropped by 27.7% year-on-year, and the northwest inland dropped by 7% year-on-year. The sown area in the Yellow River and Yangtze River basins, the main cotton-producing areas in the Mainland, has once again decreased significantly.
Production crisis
At present, new cotton has become the “relief food” continuously produced by fabric companies. However, the soaring price of cotton in Xinjiang has put fabric companies under even more pressure.
It is understood that fabric companies that are dangerously affected by the “food shortage” are currently facing a crisis of production suspension. “Currently, the Xinye area in Nanyang, Henan is the hardest-hit area, with an operating rate of only 20%. In Xiayi County, Shangqiu, the general operating rate of fabric companies is only 50%.” The person in charge of a cotton industry company in Henan recently told the media.
Currently, many fabric companies are relying on hoarding cotton for production, while fabric companies with zero inventory have to stop operations and wait and see.
It is worth mentioning that domestic fabric companies have plans to suspend production not only in the near future. A few months before the National Day, a well-known fabric company in Hubei has already suspended production, and Hebei, Shandong and other places have already suspended production. Several fabric companies are also planning shutdown plans.
Regarding the current high cotton market price, some people in the industry have proposed a dual-track system for cotton supply. The so-called dual-track system refers to putting the increment of state cotton reserves and new cotton on the market at the same time to form a dual-track system to solve the problem of excessive cotton prices.
Regarding this statement, Zheng Bo, a cotton industry analyst at Zhuochuang Information, believed in an interview with a reporter from China Economic News that the feasibility of the dual-track system for cotton supply is not high. There are still 7 million tons of cotton in the state reserve, but if a large amount is put into the market, it will not only cause cotton prices to plummet, but also damage the interests of cotton farmers.
Sun Kuanghua believes that the dual-track system, that is, the dual-track price operation of purchasing and storage and selling and storage. The cotton dual-track system is a way of national macro-control. Its purpose is to safeguard the common interests of cotton farmers and downstream fabric companies, and it is the state that pays the bill. Finance is only necessary in extraordinary times.
This also means that the dual-track system can boost the market in the short term, but in the long term, it is not conducive to the healthy development of the downstream market.
According to the reporter’s understanding, even if the state reserve cotton is released, it will be difficult to make the crazy cotton prices have a downward trend. In May of this year, after the long-awaited reserve cotton of domestic fabric companies was released, the high cotton price in the market was not suppressed, but the price became more and more crazy.
Data shows that since the State Reserve cotton was sold out, the transaction rate of State Reserve cotton has exceeded 98%, and the price has also surged from 12,428 yuan/ton to the high transaction price of 16,350 yuan/ton on July 28. , an increase of more than 30%. The high price of state-owned cotton has led to the continuous rise of spot lint cotton. The quotation of lint cotton has also increased from about 11,000 yuan/ton in early April to about 15,000 yuan/ton, with a cumulative increase of about 35%.
Earlier, during the state reserve cotton auction, due to the soaring price of state reserve cotton, many heads of fabric companies said: “If you don’t buy it, you will stop production, if you buy it, you will go bankrupt.”
Sun Kuanghua admitted frankly that judging from the current domestic market atmosphere, the dual-track cotton supply system is not suitable. The dual-track cotton supply system can maintain cotton prices in the short term, but it also brings greater financial pressure to the country. At the same time, It is also not conducive to improving the international competitiveness of the domesticcotton textile industry.
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AAAolor: rgb(255, 255, 255);”> Data shows that since the State Reserve cotton was sold out, the transaction rate of State Reserve cotton has exceeded 98%, and the price has also surged from 12,428 yuan/ton to the high on July 28. The transaction price was 16,350 yuan/ton, an increase of more than 30%. The high price of state-owned cotton has led to the continuous rise of spot lint cotton, and the quotation of lint cotton has also increased from about 11,000/ton in early April to about 15,000 yuan/ton, with a cumulative increase of about 35%.
Earlier, during the state reserve cotton auction, due to the soaring price of state reserve cotton, many heads of fabric companies said: “If you don’t buy it, you will stop production, if you buy it, you will go bankrupt.”
Sun Kuanghua admitted frankly that judging from the current domestic market atmosphere, the dual-track cotton supply system is not suitable. The dual-track cotton supply system can maintain cotton prices in the short term, but it also brings greater financial pressure to the country. At the same time, it is not suitable. It will help improve the international competitiveness of the domesticcotton textile industry.
AAASDFWFWFWE
Disclaimer:
Disclaimer: Some of the texts, pictures, audios, and videos of some articles published on this site are from the Internet and do not represent the views of this site. The copyrights belong to the original authors. If you find that the information reproduced on this website infringes upon your rights, please contact us and we will change or delete it as soon as possible.
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