The International Cotton Price Is Approaching The 15 Year High.

August 16th, China

In August 16th, the CF101 settlement price of cotton futures main contract on the Zhengzhou Mercantile Exchange rose 25 yuan to 17150 yuan / ton compared with the previous trading day.

Since August, the CF101 settlement price has risen by 4.5%.

The recent round of price surging in the international cotton futures market is the main reason for the rising price of Zheng cotton.

In August 13th, the US Department of Agriculture announced the monthly global output forecast of agricultural products. The cotton inventory at the end of 2010/11 was reduced from 49 million 610 thousand packages (1 packets, or 480 pounds or 218 kg) to 45 million 610 thousand packages.

Driven by this good news, the US intercontinental ICE cotton futures contract rose 0.63 cents on the day, closing at 84.18 cents / pound, the highest closing price since April 28th.

In the last 3 months,

Liu Shengjun, vice president of the Lujiazui Institute of international finance, China European industry and commerce school, told the reporter in August 16th that although the current international agricultural futures market was bullish, China's grain prices would not be affected too much, because China had sufficient grain reserves to deal with the price rise cycle of this round of agricultural products.

Unlike wheat and corn, which rely mainly on domestic capacity and self-sufficiency, China's cotton

Since August 10th, the reserve cotton price has been sold at a price of 16500 yuan / ton, and about 15 thousand tons of "throwing and storing cotton" on each trading day. As of August 16th, the total amount of dumping and storage has been close to 75 thousand tons, reaching 12.5% of the total planned volume.

The sale of China's cotton reserves has achieved initial success. The auction price has dropped from 18208 yuan / ton (weighted paction price) in August 10th to 18128 yuan / ton in August 13th.

Global cotton supply and demand gap hit a new high of 15 years

The tight fundamentals of supply and demand in the global cotton market are the cornerstones of the current cotton price rise.

The United States Department of Agriculture said that the harvest area of cotton farmers around the world will be the lowest level in more than 20 years, and the growth rate of global cotton production has not kept pace with the pace of demand growth for 15 consecutive years.

If the drought suffered by Russia and other CIS countries is the trigger for the soaring price of wheat futures, the rise in cotton futures prices is also inseparable from the serious floods suffered by China and Pakistan.

In a sense, the global market for agricultural products is rising steadily.

Over the past 3 months, many provinces in southern China have encountered ten years of catastrophic flooding.

According to incomplete statistics, as of July 30th, China's floods destroyed 9 million 200 thousand hectares of crops.

A market report predicts that the flood will lead to a reduction in cotton production in China by 5%-10%.

The floods in Pakistan were even more serious, with 16 million people affected and 30% of the country's cotton fields destroyed.

This directly causes Pakistan, a traditional cotton exporter, to become a net importer of cotton in 2010.

According to the report released by the US Department of agriculture in August 12th, China's cotton imports will grow by 14% to 1 million 250 thousand packages in 2011, and Pakistan's imports will increase by 53%. The global cotton demand will increase by 2.7% to 120 million 870 thousand packs in 2011, but in 2010, global cotton stocks fell 4.1%, reaching 45 million 610 thousand packages, which only met the demand of 38% cotton, reaching the lowest level since 1994.

The United States is the world's largest exporter of cotton. China is the world's largest cotton importer and the largest customer in the United States.

According to the data released by the US Department of agriculture in August 12th, China's cotton import demand has increased by 24% since 1993.

Cotton stocks in the United States also hit a new low since 1996. In the 2010 year of July 31, 2010, the US cotton stocks were only 3 million 100 thousand packages.

The market structure that is in short supply has laid the foundation for soaring international cotton futures prices.

According to Bloomberg survey, the market expects that the international cotton price will continue to rise by 13%, reaching a 15 year high of 94.9 cents / pound.

"Cold metal" and "hot agriculture" in futures market

Data released in August 13th showed that the US consumer price index (CPI) rose 0.3% in July, up 1.2% from a year ago.

By contrast, emerging markets in China and India have seen rising inflation. China's inflation rate has traversed 3% of its official control target in July, and the CPI growth rate has risen to 3.3%.

Liu Shengjun, vice president of Lujiazui International Financial Research Institute of China Europe Business School, told this newspaper that the value of commodities market began to highlight in the context of rising inflation expectations.

On the other hand, due to the slow pace of recovery of the global real economy, copper, aluminum and other metal futures markets lack good news, trading is not active, so speculative capital needs to find new hot spots, and the agricultural product market is a good choice.

In a recent report, Li Jing, Morgan, managing director and chairman of China Securities and commodities, pointed out that international grain traders who play an important role in balancing global food supply have also had a gold digging opportunity in the recent bull market of international agricultural products.

"Abnormal weather this year has led to serious differences in the grain harvest of various countries. The export restrictions caused by the interruption of production have led to further tightening of global supply.

Therefore, large multinational grain trading companies engaged in the procurement, pportation and processing of agricultural commodities have ushered in more trade opportunities.

In the context of increasing global food demand, weather changes, limited arable land and competitive demand for biofuels to produce food, these opportunities will continue or continue. "

Li Jing said in the report.