Cotton Enterprises Exert Pressure On Textile Industry With Futures Rising

Cotton price V shape inversion

During the international financial crisis in 2008, the government implemented a large-scale policy of purchasing and storage in order to prevent excessive [18.75 1.08%] prices.

Chen Xiaoyan, director of research and development of Galaxy futures Ministry of cotton industry, introduced 2008/09 cotton in total storage capacity of 2 million 776 thousand tons in the year, and about 2 million 500 thousand tons actually.

Under the influence of the state's collection and storage and loose monetary policy, the domestic cotton prices had V shape reversal at the turn of 2008 and 2009.

As of the end of August 2010, domestic 328 spot cotton prices rose 69% compared to the rescue market, matching the price of contracts in recent months rose 71%, Zheng cotton contract price rose 65% in recent months, Cotlook Far East A index rose 69%, ICE cotton contract price rose 111% in recent months, showing "cotton and yarn together strong, domestic and foreign cotton prices rising" scene.

Cotton prices in the three markets of domestic spot, matchmaking and futures have reached their highest level since 2002.

"The most prominent problem in the textile industry this year is the sharp increase in factor costs, especially the cost of raw materials at the core of cotton."

Sun Huaibin, director of the economic research center of China Textile Industry Association, said.

Textile Import Department of Ministry of Commerce

Sun Huaibin introduced that most of the hard quality indicators of the textile industry were good in the 1-5 months of this year, reflecting the continuous improvement in the quality and efficiency of the operation of the industry, in which labor productivity increased by 25% in 25% months, total assets turnover rate increased by 11%, product turnover rate increased by 25%, output value of new products increased to 38%, and production and marketing rate reached 97.2%.

In 1-5, enterprises above Designated Size realized profits of 72 billion yuan, an increase of 61% over the same period last year.

But he also said, "this is directly related to last year's low base.

And there are still some outstanding problems, one of which is the sharp increase in factor costs, especially since the price rise of cotton this year is nearly 40%.

It is difficult to stabilize cotton prices.

"The difficulty of stabilizing the cotton market is increasing," explained Ma Shuping, deputy director of the Ministry of agriculture's planting department. First, the comparative advantage of cotton and grain is weakening.

Although cotton prices are very high at present, prices of wheat, rice and corn are rising, and cotton prices are still low. Next, cotton farmers are expected to be unstable.

Cotton prices rise and fall like roller coaster, which makes cotton growers' expectations of cotton production very bad, and has hurt their enthusiasm for planting. Third, cotton production is more and opportunity cost is high. In terms of policy, food safety is the first priority, and subsidies for cotton are relatively less. This also affects the enthusiasm of cotton growers.

For this year's cotton supply situation, Ma Shuping summed up three characteristics: the area was basically flat with the previous year, the physiological period was generally postponed, and the growth situation was not as good as the whole year.

"Cotton production this year depends on the late stage. The key is to see the climate in the two months of September and October.

If there are no major natural disasters during the period, it will still be possible for cotton to get a good harvest.

Of course, if the late climate is bad, this year's cotton production and market stability is a test. "

Using futures tools to stand out {page_break}

Although the rise and fall of prices have brought great challenges to the operation of enterprises, many enterprises have discovered the "secret" of operation, that is, Zhengzhou cotton futures tools.

"Cotton futures is an indispensable means of operation."

The director of Hubei Yinfeng Industrial Group Co., Ltd., director of Changjiang new learning, told reporters that the reason why Yinfeng group is able to gain a firm foothold in the fierce market competition and realize its development is ultimately a fundamental change in the way of operation, that is, from the past single spot operation to the main business mode of "order + futures".

After the listing of cotton futures in Zhengshang, enterprises took the opportunity to develop rapidly. In 2009, they ranked 327 among the top 500 service providers in the country. They were one of the enterprises that were mainly supported by the Hubei provincial Party committee and the provincial government and achieved over 10 billion sales revenue by 2015.

"Cotton prices continued to rise last year, or even close to 20 thousand yuan mark, which is very similar to that of 2003/04.

Although some cotton enterprises are fanatical due to rising prices, we still insist on steady acquisition and will receive seed cotton processing into qualified warehouse receipts.

Through steady operation, this year's business profits have been locked ahead of schedule. "

Jiang Xin Xue said.

"Over the past few years, we have deeply felt the great difference between the single spot business mode and the current business model.

In the past, when there was no cotton futures, facing the changing market trend, our business operators were walking on thin ice, afraid to take the wrong step and lose everything. After participating in futures business, through the information guidance in hedging and futures market, we bid farewell to the "gambling market" situation. Although the market risk always exists, the difference is that we have the bottom of our hearts, and the decision is more objective and accurate.

Jiang Xin Xue describes to reporters.