Grain And Cotton Prices Rise Another Wave Of &Nbsp; Experts Shortage And Speculation Coexist.

Grain and cotton prices are rising again.

After the surge of small agricultural products,

In the early July, winter wheat had been harvested in the main wheat producing areas of Hebei, Shandong and Henan.

Cao Yongfang, a farmer in Zhengding County of Hebei, did not rush to sell the newly harvested wheat as he did in previous years.

"This year, new wheat has risen to 1 jin 1.04 yuan, last year 1 catties only then 80 Fen many, these days should also rise again."

Cao Yongfang said.

He hopes to compensate for the loss of production.

The price of agricultural products continued to rise, first in April and May this year, starting from vegetables, followed by mung bean, garlic and other small agricultural products prices soared.

Speculation in idle funds is considered to be the main reason for the last round of price increases.

In response to this, the state has introduced regulatory policies to try to punish hoarding enterprises and crack down on speculation.

Regulatory policies are still being implemented, and prices of staple agricultural products such as rice, corn and wheat have risen.

At the same time, as raw materials for textile industry

Many experts in the industry believe that the prices of staple agricultural products such as wheat and cotton are rising. On the one hand, they are normal compensatory rises; on the other hand, to some extent, they are the result of short term speculation caused by the tight market expectation of hot money.

Prices are rising all the way.

Cotton prices began to rise as early as the autumn of 2009.

According to Wang Aifang analysis, "up to now, compared with the average price in 2008-2009, cotton prices have increased by 30%, and the same period has risen to 40%-50%, the highest point in ten years".

According to the latest information released by China cotton net, in July 6th, the domestic spot price index of China Cotton (CCIndex328) was 18383 yuan / ton, which has risen by nearly 4000 yuan compared with the end of last year.

As the raw material of the textile industry, domestic cotton 95% is used for spinning, cotton from seed cotton, lint to yarn, and finally weaving, printing, dyeing, finished products and export. It has a wide chain of upstream and downstream industries. At present, the price of raw materials is continuously flowing downstream.

Zhao Lanning, manager of Huate Textile Co., Ltd., Shijiazhuang, Hebei, pointed out that cotton prices have pushed up the price of cotton yarn, and the price of cotton yarn has increased by about 1/3 compared with that after the Spring Festival.

"In April, the price of yarn went up, and at that time it was stored up, but the cost was too high, and it was only enough for two months."

Xiao Li, who runs yarn business in Chongqing, said.

As the cost of raw materials such as cotton and cotton yarn has risen sharply, textile enterprises and garment processing industry as the downstream industry chain are increasingly feeling the pressure of rising costs.

The latest research report released by the China Cotton Association shows that the price of raw cotton material continues to rise, and the profits of downstream garment enterprises are reduced. Many weaving enterprises choose to stop working and leave, while clothing companies are more cautious when receiving orders.

"The price of cotton yarn has gone up too far, but the price of cotton cloth is limited. We are worried that if the price falls, the risk will be too great. After the Spring Festival, we will no longer produce cotton cloth and specialize in the relatively stable dacron cloth."

Zhao Lanning told this reporter that "franchised cotton factories only reserved a small number of looms to produce cotton cloth, which was used to maintain the source of tourists and the rest to produce other fabrics."

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Similar to the rise in cotton prices, wheat has changed its normal price before the summer harvest.

According to the statistics of China's flour mill, the purchase price of wheat in Shandong's Liaocheng market is 0.96 yuan / Jin, and then the wheat price goes all the way. At present, the farmer's direct selling price is 1 yuan / Jin, and the individual grain trader's purchase price is 1.01 yuan / Jin, and the purchase price of flour enterprise is 1.02 yuan / Jin.

In Hebei, Anhui, Jiangsu and other major wheat producing areas, wheat prices have been rising all the way, and in some areas, even across the province rush to buy wheat.

"But even so, buyout companies still can't buy enough wheat, and farmers are generally reluctant to sell."

China International Futures Limited Interim Research Institute cotton analyst He Yongtao said.

Shortage and speculation coexist

Ma Wenfeng, an analyst at the eastern Agribusiness Consulting firm, said that the prices of staple agricultural products such as cotton and wheat continued to be strong. They were attracted by the tight supply of the above products and the reduction of expected supply.

Overall, the revival of garment and textile industry has led to the demand for cotton.

With the global economic recovery after the financial crisis, China's textile industry has been running smoothly since the first quarter of 2010, with an increase of 13.4% in value and a relatively rapid growth in exports, and the domestic market continued to thrive.

But the supply of cotton did not keep up.

In the financial crisis, the demand for textile and clothing has shrunk sharply, resulting in a decline in demand for cotton and a sharp rise and fall in the cotton market. The average price of cotton in 2008-2009 is only 12159 yuan / ton, the lowest price in recent years, which severely damaged the enthusiasm of cotton growers. In addition, the increase in agricultural prices and the increase in labor costs all raised the cost of cotton production. In 2009, both cotton planting area and output declined.

At the same time, cotton imports accounted for 1/3 of the domestic output in the past, and at the same time, it also dropped significantly. Due to weather factors, the market expects that the new cotton market will be postponed this year and the market short term gap will be larger.

Based on this, the rise in cotton prices can be understood as a result of changes in supply and demand.

But according to the information released by the cotton trading network, according to the cotton purchase price in 2009, the cost of cotton should be around 15400 yuan, and it is rare to sell it to more than 18000 yuan and to stay at a high price for four months.

"Within the industry, it is obvious that cotton prices are rising too fast this year."

Wang Aifang pointed out that other industries are rising prices, cotton prices are rising at the latest, prices rise so "off the mark", may be idle funds, "before real estate speculation, now turned to cotton."

In the long term observation, He Yongtao found that although the overall demand was great, the traders in the middle of the market had greater enthusiasm for stocking, while the demand for textile and clothing downstream industries was more stable.

Although the price of cotton has gone up, the spot market is rather cold.

He believes that due to higher costs, coupled with the appreciation of the renminbi expected, textile and clothing downstream industries are generally worried about the high price decline, too much storage lead to losses, so tend to use the side of the stock, slowly digest.

But intermediate traders have little risk of changing hands and do not rule out their hoarding possibilities.

"The middlemen with special cargo have made a profit!" Zhao Lanning sighed. "If we see the price rise at the beginning of the day, we will buy more at once."

Capital adequacy

The change of supply and demand also raised the price of wheat.

According to the Ministry of agriculture information on agricultural scheduling, the total output of summer grain in 2010 will exceed 246 billion jin, close to the 2009 level.

Among them, winter wheat output more than 217 billion jin, an increase of nearly 2 billion jin compared to 2009.

But according to Ma Wenfeng analysis, according to the weather changes and interviews with farmers, the grain production has not been increased as officially announced, and because of the extreme weather this year, the yield per unit area has dropped by 10% in most areas.

But because of the increase in planting area, the reduction in production is about 1 million tons nationwide.

The reduction of production has increased the expectation of price increase, and the market participants have entered the market at a high price.

Wanda futures researcher Ding Sunya believes that the bulk grain purchase of China's grain storage, COFCO and China grain markets has further driven the market's other main players to catch up with the wind and promote the price of wheat.

However, the head of the Department of crop cultivation of the Ministry of agriculture pointed out that China's grain production has increased continuously for six consecutive years. In the face of adverse weather factors such as extreme weather this year, the grain output in summer is close to last year's level, and the inventory level is adequate. The fundamentals of wheat supply and demand have not changed.

Therefore, the rise in grain prices may be affected by other external factors in the short term.

For a long time, China has implemented a low grain price policy and subsidized farmers with the lowest purchase price and various subsidies.

Lu Feng, a professor at Peking University, thinks that the rise in prices reflects the signals of the market. Behind the rush of market players, it shows that the scarcity of wheat is increasing.

He pointed out that the root cause of the rise in prices is the monetary policy of the pre - macroeconomic easing. After stimulating the price of small agro products such as mung bean and garlic, the latter stimulated the price increase of bulk agricultural products.

Ma Wenfeng believed that with the increase of production costs such as fertilizers and seeds, the profit of farmers per mu of land was only 100 yuan, plus all kinds of subsidies could reach 200 yuan, the profit was too low, and the cost of labor and labor increased. Farmers were dissatisfied with the price and had a reluctant selling mentality, thus contributing to the tight supply.

He further analyzed that excessive issuance of money would certainly push prices up.

Prices have risen overall this year, of which rice rose 15%, corn rose 20%, vegetables rose 30%, oil rose 30%, and wheat rose by only 10%, the lowest.

"In fact, the problem of macro aggregate demand is too much, and funds are nowhere to go."

Ma Wenfeng asserted.

Wang Yuanhong, a senior economist at the National Information Center, said that whether the mung bean, garlic and other small agricultural products or wheat, cotton, these staple agricultural products, have a certain rigid demand for easy storage, which is conducive to short-term speculation.

He pointed out that speculation writers generally use local regional supply and demand short-term imbalance, extreme weather and other opportunities for speculation.

Because agricultural products are more affected by the weather than the industrial products, the recovery needs a certain period of time.

Wang Yuanhong also believes that the rise of staple agricultural products such as wheat and cotton is mainly due to the fact that the state has restricted the project of "two high and one capital" under the condition of ample capital mobility, and has intensified the regulation and control of the real estate market. The stock market is in a doldrums, and the investment channels of social capital have been squeezed. Some of the funds have chosen profits from major agricultural products such as wheat and cotton.

Policy difficult to control {page_break}

What is the price trend in the future? The head of the Department of crop cultivation of the Ministry of agriculture pointed out that the price rise in the past was often beneficial to middlemen, but the income of the farmers was limited.

The future price adjustment should prevent big ups and downs and maintain market stability.

Zhang Hongyu, director of the policy and regulation department of the Ministry of agriculture, stressed that the rise in prices of staple agricultural products such as grain and cotton is not related to the contradiction between supply and demand and labor costs, but also does not exclude speculation caused by excess liquidity.

The price increase of bulk agricultural products and the steady resumption increase will increase the farmers' income, but we must control the price in a certain range by means of regulation and control.

Ma Wenfeng analysis shows that grain prices will continue to rise in the latter part of the grain price, but because the government has sufficient grain reserves, even if the wheat production is reduced, the fundamentals of tight supply and demand will not change, and there will not be a sharp rise.

After investigation, the relevant departments have suspended the policy of purchasing grain from grain reserves in China. Since July, wheat prices have begun to run steadily.

But the regulation of cotton is not as easy as wheat.

Since June, due to the rapid rise in cotton prices, the NDRC has announced two increases in cotton import quotas, and the plan for dumping 600 thousand tons has also been approved. The trading rules have been completed and can be activated at any time if the market needs.

After the policy was issued, the market was worried that the state would regulate cotton. Therefore, cotton futures fell down and adjusted, but with the gradual digestion of information and high profit in spinning, cotton demand was strong, cotton spot prices continued to rise, cotton futures prices gradually stabilized and picked up, and strong potential remained.

He Yongtao believes that in the case of only 1 million 500 thousand tons of cotton reserves in the country, although it has approved the dumping of 600 thousand tons, but 600 thousand tons is only a month's market demand, the ability to control the market is limited.

He pointed out that in the market at that time, the rumor that the government had to throw the store had a certain effect on the price, and the price dropped rapidly by 1000 yuan, from 17 thousand yuan to 16 thousand yuan. But after that, the market bullish trend resumed after 600 thousand tons, and the price rose again.

China Cotton Association survey report also pointed out that, because the policy is hung up, the market gradually digested bad news, the downstream yarn market volume and price change little, further supporting cotton prices.

"Now the price and time of the 600 thousand ton throw have not been fixed. If the price is obviously lower than the market price, it may also suppress the market."

He Yongtao said, "but if the weather and the influence of Xinjiang cotton are added, the main contract may still be at a high level."

Ma Wenfeng pointed out that the rise of cotton prices eventually spread to the terminal of the industrial chain, or was paid by cotton farmers and terminal consumers.

He estimates that by next spring, the price of domestic textiles will increase by about 20%.

Wang Yuanhong believes that because cotton and wheat are not terminal consumer goods, they may have limited impact on CPI.

Some scholars also believe that excessive cotton prices need to be fed back to the frontiers when the terminal is digested or difficult to digest.

He is worried that some small factories will stop production because of the high cost. Some big factories may lose money due to the excessive price gap between export orders and raw materials.