Cotton War, How Sad And Dreary

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The recent surge in prices of all kinds of agricultural products is deeply affecting the market and people's lives, and has led to price intervention by relevant departments. In October 20th, 300 thousand tons of temporary storage of rapeseed oil will be put into the market in October 22nd. In October 22nd, the first batch of 210 thousand tons of sugar will be put into the market. As of October 15th, China cotton storage company has put in more than 900 thousand tons of cotton reserves.

Take cotton as an example, spot prices and futures prices have both set a new record.

What is driving cotton prices skyrocketing? Cut production, demand or speculation? Recently, we went to Jianghan Plain, one of the five major commodity cotton bases in China, looking for the "pushing hand" of this price increase.

After 34 months, the sudden increase in interest rate reflects the central bank's current inflationary pressure.

In an instant, the price could not be controlled, so that Li Renhu could be locked in the eyebrows of cotton merchants, and only 150 million yuan of cotton purchase money would lend him 5 million yuan.

Even if he borrowed money, he would not necessarily be able to buy cotton.

After the National Day holiday, cotton prices continued to skyrocket on the occasion of the listing of new cotton concentrates. Therefore, a rather bleak cotton war was staged in Jianghan Plain, one of the five major commodity cotton bases in China.

Hard to sell, hard to buy

If it were not for this continuous autumn rain, after the National Day holiday, the Jianghan Plain will immediately launch a close combat.

In previous years, the struggle for cotton would take place between enterprises and enterprises, even between brothers and brothers.

This fall this year, they face unprecedented difficulties.

"If I knew that the price of seed cotton would go up this way, I would not have sold that 400 Jin before.

Oh, no way, no one will grow up. "

Lao Yang, a 68 year old villager in Xin Deng village, Li Town, Shayang, Jingmen, Hubei, is full of regrets, mixed with worries about the cotton harvest this year. "This year's weather is bad, it always rains."

If there is no sun, cotton bolls will not burst.

If it rained for a few days in a row, the cottonseed would change color and even rot, and the discolored seed cotton would not sell well.

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In a few days' interviews, all cotton farmers who sold seed cotton before the national day were complaining about their short-sighted behavior. "Those dealers have made a lot of money. We can not make any money by planting cotton."

According to Lao Yang, as early as mid August of this year, when the new cotton was sporadically listed, there were cotton traders to buy it. "The highest quality can be sold to 3 yuan, 3 cents, 1 jin, and the difference is about two yuan.

Dealers want everything, some cotton just pick up, and have not been stall away.

Lao Yang also said he had a hunch at the beginning of September, and this year he must earn more money than before.

After that, the fluctuation frequency of cotton price curve also exceeded the experience of Lao Yang for decades.

According to China's cotton price index, the average price of grade 328 cotton in August was 18124 yuan / ton, which rose to 19323 yuan / ton in September, and the price in October jumped to 23072 yuan / ton, which is far beyond the psychological expectation of Zhang Pujin, general manager of Hubei Shayang silver branch cotton limited liability company (hereinafter referred to as "silver cotton").

The small size silver branch cotton was first built in 2007, mainly for the initial processing of seed cotton, such as deseed, dehumidification, packing and so on, and the main capital of the enterprise is to buy seed cotton.

In the morning of October 13th, looking out of the window for 3 days of autumn rain, he did 8 years of cotton business Zhang Jin confessed, really do not understand the market.

"It's a price a day.

At this time last year, the purchase price of seed cotton fluctuated between 2.7 yuan and 2.8 yuan per catty, and this year the factory price directly went to 5.7 yuan per catty, which has more than doubled.

What is even more frightening is that "at such a high price, we still can't buy seed cotton, and we are all grabbing goods everywhere."

According to its introduction, only one small county in Shayang has more than 40 large and small seed cotton processing enterprises. "Everyone is collecting money while looking for supplies. This year's cotton is definitely going to cut down because of bad weather. Now who has the goods in hand, he will make money."

For this reason, despite the humid and cold chilly rains in the Jianghan Plain, Zhang Pu Jin and his colleagues are still rushing to find cotton everywhere, but the effect is still not ideal.

"At this time last year, it could process about 15 tons a day, less than 1/5 of that daily.

At present, the seed cotton that can be processed in the factory can only last 2 days.

This is the result that Zhang Pujin most unwilling to see, because "once the machine stops, there will be no income, but every day the wages of workers should be paid, and the rent of the pformer will be about 400 yuan per month."

It has been observed that nearly 80% of the cotton processing enterprises in the region are under construction problems, and even many small businesses are in a state of complete shutdown.

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This year, the soaring cotton prices have made people unable to restrain their imagination of wealth, but this has not made Lao Yang and local cotton growers resolutely continue to grow cotton.

"Cotton has become more and more worthless in recent years. No one is willing to grow cotton now." Lao Yang, who planted cotton all his life, began to doubt the value of continuing his old business.

He gave the reporter a detailed account: last year, a total of 420 catties of seed cotton were collected per mu, the highest price per catty was 3 yuan, and the output value of cotton per mu was 1260 yuan, after deducting the necessary investment of 400 yuan, such as pesticides and chemical fertilizers, the gross income per mu was 860 yuan.

"However, cotton can not be planted mechanically, and pesticides will be insecticide every few days. In addition, fertilization, watering, picking and weeding are needed. It needs much more labor than other species."

But the key is that there is no labor in the village now. Young people are working outside the country. The village is left with old people and women, who are rich and can not hire helpers unless they have very high wages.

Lao Yang, a cotton grower, has spoken out the hearts of many cotton farmers in the Jianghan Plain.

Zhang Jianyuan, Deputy Secretary General of Hubei Cotton Association, admitted in an interview with "daily economic news" that the main problem in the cotton industry is unstable cotton production, unstable planting area and fluctuating too much. Production is essentially determined by the income of cotton growers. The market purchase price of cotton directly affects the enthusiasm of cotton growers.

At the same time, he also said that because the country's subsidies for cotton cultivation is not enough, it also directly affects the enthusiasm of cotton farmers. "Now, planting one mu of cotton is subsidized 15 yuan, not as good as soybeans and so on.

Rice even has a subsidy of 100 yuan per mu. "

According to a survey report of Hubei Cotton Association, Xiantao, Qianjiang, Tianmen and other concentrated cotton producing areas in Jianghan Plain, in recent years, cotton farmers have abandoned cotton to grow crops such as corn and soybeans.

Among them, the cotton area in Xiantao decreased by 22% in 2009 compared with the previous year, and most of the reduced cotton area was planted with cash crops such as corn and soybeans.

From 2003 to 2010, the annual average area of cotton planting in Hubei province fluctuated greatly, especially in 2008 cotton prices were low, agricultural prices were higher, and the comparative efficiency of cotton planting decreased. The cotton planting area in 2009 was reduced to 6 million 901 thousand and 500 mu, which decreased by 1 million 243 thousand and 500 mu compared with 2008, and the reduction was as high as 15.27%.

In fact, Hubei, as a major cotton Province, is not alone. The shrinkage of cotton growing areas across the country has become an irreversible trend.

According to national cotton market monitoring system, China's cotton planting area has dropped to 77 million 690 thousand mu in 2009, down 12.5% from the same period last year, the lowest value since 2003.

"The demand for cotton market in China is about 12 million tons per year, and the total domestic product is about 7 million tons. Other countries need to import from the United States and India.

As a result, domestic cotton prices are directly affected by changes in planting area. "

Quan Zhengtao, manager of Investment Department of Hubei Yinfeng cotton Limited by Share Ltd, which has long studied cotton industry and engaged in cotton futures investment, said.

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The information learned by reporters from China's first textile network shows that not only China, but also the world's largest exporter of cotton, its cotton output has dropped from 5 million 201 thousand tons in 2005 to 2 million 654 thousand tons in 2009, a drop of 48.97%.

India, the largest importer in China, has frequently restricted cotton exports since April of this year.

Obviously, in today's globalized environment, as the largest cotton producing country, the largest cotton consuming country and the largest importer of cotton in the world, "cotton prices in China are not only affected by the internal factors of the country, but also from the external supply and demand relations directly to the price itself."

Tight capital chain

At this time of the year, Zhang Pujin and his friends from the underground textile enterprises such as Anhui, Jiangsu and Hunan will be very enthusiastic. But this year, he is faced with the dilemma of no goods available. Not only is there no goods in the warehouse, it is because of the shyness of the bag, "the bank has given me 2 million yuan, but in accordance with the current market situation, this money can not play a big role."

Like Zhang Pujin, the heads of cotton processing enterprises scattered in every corner of Jianghan Plain are facing the same problem: lack of money.

In the office of the 3 floor of Hubei Jingmen wide silver cotton limited company (hereinafter referred to as "Guang Yin cotton"), Li Renhu, the chairman of a straightforward personality, complained: "the agricultural issue of our county has given me a total loan of 5 million yuan this year, but our enterprise must raise the purchase fund of not less than 150 million yuan this year."

As a key leading enterprise of agricultural industrialization in Hubei Province, Guangdong silver cotton has been the only private enterprise in the country's pilot reform of cotton quality inspection system, with the annual production capacity of 10000 tons of lint.

This is a company that can still be forced to bow this year. "Our company can get 30 million yuan of corporate loans from the bank every year. This year, the fund is really a bit tight.

If the price is not so high, we need about 70 million yuan a year for the acquisition fund.

For the rest of the huge funding gap, Li Renhu said he would have to raise money by way of social financing and employee fund-raising, but he probably did not know that the agricultural bank that was lending to him was also under enormous risk pressure.

In October 12th, we learned from the Hubei agricultural development bank that, at the end of September, the Agricultural Development Bank issued the notice on the implementation of the 2010 cotton purchase loan line and loan risk control line in the system.

According to this document, the 2010 cotton year's standard cotton loan is set at 700 yuan / load, the highest can float 50 yuan / load.

According to the calculation of 750 yuan / Dan, the on-line loan of seed cotton is about 7 yuan / kg.

This red line defines the maximum loan amount that cotton processing factories can acquire for 1 kilograms of cotton.

Now the price of seed cotton has risen to 5.7 yuan per kilogram, that is, 11.4 yuan per kilogram, which has far exceeded the maximum loan of the Agricultural Development Bank in Jingmen.

"Most cotton processing enterprises have at least half of their annual funding from the Agricultural Development Bank's loan support.

If this year's Bank loan quota is like this, I guess many enterprises, especially those small and medium-sized enterprises, will lose a lot. "

Li Renhu predicted so.

Because of the price rise, the pressure on all links of the cotton industry chain is a challenge to the ability of enterprises. Liu Sunming, deputy general manager of Hunan Dongxin Cotton Industry Co., Ltd., told the daily economic news, "we are now visiting cotton suppliers all over the country. The cotton price rises this year exceed our expectations."

He said, at present, the company's financial pressure and operating risk are not small. "On the one hand, our workshop machinery and equipment can not stop, which requires adequate supply of raw materials; on the other hand, we really dare not rush to raise the price of our products, otherwise we can't sell it."

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In fact, in Li Renhu's view, the pressure of customers is not so great.

"I have given them an account. Even if we get the highest price lint now, the textile enterprises can still earn 8000 yuan per ton."

According to the National Bureau of statistics, in the first 5 months of 2010, the overall profit rate of China's textile industry and cotton textile industry was 4.7% and 4.92% respectively, the highest level in recent years.

The cost price of pesticides, fertilizers and labor has doubled, and cotton prices have risen by 60%.

Therefore, I think cotton prices should continue to rise, which is conducive to the long-term development of the cotton industry.

Only if farmers have the enthusiasm of planting cotton can we really solve the fundamental problem of China's cotton industry.

Reporter observation: who knows how many cotton planted?

The history of the cotton industry is seen as a microcosm of the globalization process after Eric Orson took a trip to the seven major cotton growing countries on five continents. "Cotton grows well, and the world becomes more peaceful and noble."

If he agrees with his view that cotton discovery is the first globalization and cotton cultivation is the second globalization process, the current infiltration and influence of the major producing areas can be regarded as the third globalization.

In October 8th, the US Department of agriculture (USDA) released a forecast for the global cotton production and marketing in 2010, saying that the global supply and demand will be in an imbalance crisis. "The end of global cotton stocks will be reduced to 9 million 724 thousand tons, and the inventory consumption ratio will drop to a historical low of 37%, while China's supply and demand will be 3 million 800 thousand tons, of which 73% will depend on imports".

Since 1999, China has entered a time of full circulation of cotton, and has gradually become part of the global market.

In today's globalization, if China's cotton planting area continues to shrink, then China's cotton dependence will become larger and larger.

Luo Yasheng, Secretary General of Hubei Cotton Association, also expressed concern that the pricing power is a very important issue in China's cotton industry. "Now from the world's situation, cotton and cotton production are in China, but the price is not determined by us.

The price of cotton in the world is still a reference to the United States. "

To grasp the pricing power, accurate data statistics play an important role.

Hubei cotton industry, a person who does not want to be named, bluntly said: "now many people are complaining about the accuracy of cotton planting area statistics, and the cotton industry has been open for more than 10 years. I think the data and statistics system has been in such a bad operation or even paralysis."

He said that there is no authoritative and scientific data, and everyone is confused.

Li Renhu, chairman of Guang Yin cotton, has the same feeling.

He told reporters that if an organization could produce a basic data report on China's cotton industry at regular intervals, he would be willing to pay high prices to buy their products.

There are more than one person who has this idea. Most of the insiders interviewed by our reporter expressed the hope that authoritative institutions in China could provide accurate basic data of cotton industry. "An American cotton enterprise that we work with will produce tens of millions of yuan each year to investigate cotton planting area in China. They will go to every province, every county, every village, and even every household cotton grower."

This requirement for data accuracy is difficult for most of the statistical departments in our country, and our data are often not instructive.

Zhang Jianyuan, Deputy Secretary General of Cotton Association of Hubei Province, bluntly pointed out that at present, cotton enterprises in China are basically scattered, and there is no professional trade association to do some basic and organized work.

"The relevant departments of the state should increase support for all parties in the cotton industry, especially the government's functions, which can be entrusted to the cotton association."