The Imbalance Between Supply And Demand &Nbsp; &Nbsp; The Main Reason For The Rise Is The Frenzied Speculation In Cotton Prices.

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Following the cotton production (cotton growers) - cotton seed processing - cotton processing and sale - Cotton Textile - clothing manufacturing this simple industrial chain, a week, the daily economic news reporter in Xinjiang cotton main production area field survey found that cotton circulation (seed cotton acquisition - cotton processing and sales) is facing all kinds of capital "sniping", become the "risk accumulation place" in this round of cotton prices soaring.

"Once the cotton price falls, these cotton enterprises sitting on the" crater "will suffer the doom like the sharp rise and fall of cotton prices in 2003.

September 29th, Shihezi, Xinjiang

The imbalance between supply and demand has risen, mainly due to frenzied speculation.

Cotton prices that have been rising for nearly a month are beyond many people's expectations.

"As early as August this year, we expected cotton prices to rise."

In September 29th, Song Yunfeng, director of the Xinjiang agricultural eight division, Shihezi Economic Committee (Industry Bureau), told the daily economic news reporter that they also reminded the cotton enterprises in the area to make preparations for the acquisition of cotton ahead of schedule. "But I did not expect the cotton prices to go up so crazy in September, and it was not enough for them."

According to the rule of past years, cotton in Xinjiang is the first time.

"After the cotton price plummeted in 2008, fewer people grow cotton."

Shihezi township a cotton processing plant owner told the "daily economic news" reporter, in 2008, the local cotton planting area has more than 7 acres, but now less than 20 thousand acres.

Nur, a 50 year old Barker village in the village of Baker, has replanted soybeans (4104, -19.00, -0.46%) and corn (1992,0.00,0.00%) after experiencing a steep fall in cotton prices in 2008. Next year, she plans to contract 12 acres of land to others.

"In addition to the reduction in area, mainly due to the low temperature this year, coupled with the ice and snow disaster, this year's production decline is almost a foregone conclusion."

Song Yunfeng said that every year from August to new cotton listing, it is precisely the "vacuum period" of cotton supply. From past years, private capital will act and cotton prices fluctuate more frequently.

The news that cotton production in India is restricted by international cotton producers, and cotton production in Pakistan has been greatly reduced.

From August to September this year, the cotton association of China conducted an investigation into the main producing areas of cotton in China. According to the survey results, the average cotton yield per unit area is 87.1 kg / mu this year, down 0.4% from the same period last year, and the total output this year is 6 million 700 thousand tons, down 1.5% from the same period last year.

"The supply gap has led to the rush buying of cotton enterprises, which has made cotton prices skyrocketing."

In September 29th, Mao Shuchun, a cotton Research Institute of Chinese Academy of Agricultural Sciences, expressed his concern to the "daily economic news" reporter. "The highest price of seed cotton in Kuitun, Xinjiang has reached 12 yuan / kg."

As early as August this year, Mao Shuchun and several colleagues released the "mid-term outlook for cotton production and demand in the middle of 2010". In this analysis report, they thought that "the price of new cotton is still rising, but it should not exceed 8 yuan / kg."

But now, the price of seed cotton in Xinjiang has exceeded 10 yuan / kg, hitting a new high in the past 15 years.

"If the cotton processing plant purchase price of seed cotton reaches 10.4 yuan / kg, once the processed lint is sold at less than 24 thousand yuan / ton, the processing plant will surely lose."

Hong Ping, deputy general manager of Xinjiang Western Silver cotton industry (Group) limited liability company (hereinafter referred to as silver force group), told reporters that according to his calculations, the price of lint per ton was 18 thousand yuan ~1.9 million yuan more reasonable, "cotton farmers, processing plants, cotton spinning enterprises have earned."

Liu Wei, general manager of Shihezi Galaxy Textile Co., Ltd., Xinjiang, also said that if the price of lint is above 20 thousand yuan / ton, it is difficult for cotton spinning enterprises to bear it.

"Now the price of seed cotton remains high, cotton processing enterprises dare not buy a lot of goods, and no lint is produced."

Hong Ping said that cotton traders, cotton processing plants and cotton mills were "shouting high" at the moment, but in fact, they had no market price, and businesses were in the wait-and-see stage.

The silver force group is the largest lint sales company in Shihezi. Hong Ping says that there are few cotton textile companies currently in need.

Industrial chain risks accumulate, cotton prices rise every month, but not the end of myth.

Nowadays, all kinds of capital are rushing to the cotton circulation link.

According to reports, in Xinjiang, cotton area is mainly divided into corps cotton area and local cotton area.

The cotton in the cotton production area of the regiment must be sold to the processing units in accordance with the guidance price. The processed cotton will then be handed over to the corps or those with fixed cooperative relations to sell abroad, and the cotton farmers can not sell them privately. The cotton area controlled by the local authorities has been completely marketed, and the cotton farmers can sell them freely.

"The cotton price boom mainly occurred in the cotton area of the local area. Because of the mature sales network and system, the Corps can only be said to have been affected."

Hong Ping said that in the entire industrial chain, capital will be profit oriented in the circulation field: that is, the tight supply of cotton is expected to rise and cause a reluctant sale - Cotton Traders sell high prices for cotton - cotton processing plants / cotton spinning enterprises rush to buy at high prices.

In Shihezi Township, where less than 20 thousand mu of planting area is available, 8 cotton processing plants purchase cotton, and each factory has a capacity of up to thousands of tons per day.

"Processing plants are all locally employed workers, who have interest on loans every month. If they stop production, workers will be lost, and it will be very difficult to find workers again."

A Zhejiang business owner in Shihezi Township told the "daily economic news" reporter that cotton processing enterprises had to start running, but "8 factories were struggling to eat cotton in one Township, and they simply couldn't eat enough."

Taking their factory as an example, the design and processing capacity is 5000 tons, but the daily processing capacity is less than 2000 tons.

"Cotton price is too high, we dare not rush to buy."

But every year, companies sign contracts of supply and marketing with cooperative cotton mills, and they have to buy them.

"The risk has been pferred from cotton dealers to us."

The Zhejiang businessman can only look at more than 200 tons of lint piled up in the factory every day.

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"Whether the final cotton price will fall depends on how the cotton mill sells its products."

Hong Ping believes that the price of cotton yarn produced by some local cotton mills has quoted the price of 30 thousand yuan / ton, "but whether we can really sell it depends on the capacity of the downstream garment factories."

Song Yunfeng told reporters that in the face of such high cotton prices, the local government is ready to act.

"We are preparing to issue a document to the relevant enterprises, which requires that the cotton lint they buy must be given priority to the local cotton mill."

In addition, the local government is making statistics on the production capacity of cotton enterprises, data on cotton production plans, cotton yarn production and new cotton consumption in the next 12 months, so as to deploy the supply ahead of schedule.

Locally, the production capacity of cotton spinning is 2 million 400 thousand spindles, which is about 300 thousand tons of cotton per year, and the highest cotton output in local history is only 320 thousand ~36 tons.

It is worth noting that, in the industry's strong expectations for cotton prices, the frenzied cotton prices have turned a U-turn.

It is understood that in recent years, North Manasi 40% linen quotations to 10.40 yuan / kg, and the southern Pu Hui 40% points to 10.60 yuan per kilogram or kg, compared with the previous general reduction of 0.20 yuan / kg, the number of acquisitions has also shrunk.

"Once the cotton price falls, these cotton enterprises sitting on the" crater "will suffer the doom like the sharp rise and fall of cotton prices in 2003.

In September 29th, the head of a cotton enterprise department in Shihezi, Xinjiang, told reporters that cotton prices continued to rise and become more and more stressed.

In September 28th, RitaMenon, Secretary of the textile Ministry of India, said that a ministerial level organization on Tuesday decided to allow exports of cotton from November 1st, which dispelled fears that the country's exports would be postponed.

In September 29th, the 1105 contract of zhengmian main contract was firmly sealed on the limit board in the afternoon, which is also the first stop on sale since November 2008.

At this point, the myth that the price of cotton has risen in the last month has ended.

Zhang Xiaoqiang, deputy director of the national development and Reform Commission, said at the recent national cotton work teleconference that the current market price of cotton has a great relationship with speculation in the market.

Short term excessive rapid increase in cotton prices makes the downstream digestion difficult, and the rise from the fundamentals of supply and demand is unsustainable.

Excessive cotton prices will promote textile enterprises to use more chemical fiber raw materials, thereby reducing cotton demand and inhibiting cotton price rise.