Cotton Prices Broke Through The Historical High &Nbsp; Loans Are Facing Unprecedented Security Risks.

The cotton market in 2010 is doomed to endless waves.

As early as May this year, domestic cotton prices began to rise steadily. After the new cotton scale started, cotton prices soared at an alarming rate, rising almost 100 yuan per day, and the spot and futures prices both broke through the historical extremes of 25000 yuan per ton.

This scene can not help but recall the situation 6 years ago, and cotton prices fell to the bottom after soaring.

So, will the crazy cotton market again this year?

Due to the high concentration of private cotton enterprises, Akesu has become the hub for the sale of cotton in southern Xinjiang in the past few years. The price formed locally has become the weathervane of Xinjiang's cotton purchase price.

As cotton prices continue to rise, cotton processing enterprises and cotton traders in the main cotton growing areas of southern Xinjiang have launched price wars, competing to raise prices and rush for cotton harvest.

Since September 20th, China's cotton market prices and futures prices have set a new record in both history, of which futures prices have been hovering around 24000 yuan per ton after several times of trading.

Recently, the cotton producing area in southern Xinjiang has learned that although the acquisition of cotton has not yet started on a large scale, the price war has become more intense.

At present, the purchase price of Akesu has reached 12 yuan per kilogram, breaking through the historical extreme value of 10 yuan per kilogram in autumn 2003.

According to Fang Hongyan, general manager of Tianshan cotton industry in Akesu, Xinjiang, according to the current purchase price, the acquisition and processing cost per ton of cotton has exceeded 25000 yuan, and the current delivery price of cotton in Xinjiang is only 25000 yuan per ton.

Fang Hongyan said that in the current situation, if we do not accept it now, we will lose more cotton in the later stage.

Price war not only increases the risk of local cotton business acquisition, but also brings huge financial pressure.

According to some cotton business enterprises, in the past year, 30 million yuan of funds could buy nearly 2800 tons of cotton at a time, and only more than 1400 tons could be received this year.

At present, the buyout enterprises in southern Xinjiang are facing the problem of shortage of funds in varying degrees.

According to Chen Shiwen, executive vice president of the Wenzhou chamber of Commerce in Akesu, at the moment, the acquisition of local enterprises mainly depends on their own funds and the deposit of their customers. Once the cotton purchase reaches its peak, tens of millions of yuan of funds will certainly not be enough. Enterprises can only shorten the turnover time by speeding up the sales progress.

However, due to the limited capacity of Xinjiang railway's outbound pportation and difficulties in pporting cotton, it is difficult for capital to return in time, and enterprises will face greater financial pressure.

In the case of high cotton prices this year, the loans issued by the Agricultural Development Bank this year will face unprecedented security risks.

Although China's textile export situation has improved, it still faces many uncertain factors. Once the cotton price rises and falls 6 years ago, the risk will be pferred to banks.

While many Cotton Traders complain bitterness over the rise in cotton prices, the frightening prices are also worrying the local financial sector.

Due to frequent fluctuations in domestic cotton prices in recent years, agricultural banks and other state-owned commercial banks or the withdrawal of cotton acquisition, or tightening the size of credit funds, currently supporting the acquisition of cotton enterprises financial units only the Agricultural Development Bank and rural credit cooperatives.

Restricted by the scale of funds, the funds that enterprises can lend from the rural credit cooperatives are too few to meet the needs of the actual purchase. The Agricultural Bank which provides nearly 30 billion yuan of loans each year has become the main source of Xinjiang's cotton purchase funds.

Because every fixed asset of the cotton purchasing enterprise from the agricultural development bank does not exceed 20 million, it often has to borrow hundreds of millions of yuan to acquire funds to satisfy its operation. Under the high cotton price this year, the loans issued by the Agricultural Development Bank this year will face unprecedented hidden dangers.

Although China's textile export situation has improved, it still faces many uncertain factors. Once the cotton price rises and falls 6 years ago, the risk will be pferred to banks and the security of funds will not be guaranteed.

Faced with increasing risks, the Agricultural Development Bank of China recently decided to stop issuing cotton purchase loans.

Ding Xingui, director of the two branch of the Xinjiang branch of the Agricultural Development Bank, said: "lending at this time will aggravate the current price war; if it is not allowed, it may cause the enterprises to make ious for cotton farmers because of insufficient funds.

It is very difficult to ensure the safety of these funds and avoid the enterprises from making IOUs. "

In 2009, there were some enterprises in Xinjiang who failed to pay for the purchase of funds. The good price was that cotton prices were good. After paying back the money, the enterprises finally paid the farmers' cotton sales.

Cotton prices may enter new operational space in the future

Due to the frequent disasters in China this year, the cotton area is basically flat and the production is hopeless. In the textile industry, the demand gap for domestic textile cotton is further expanded.

According to the China Cotton Association survey, in August this year, the continuous hot weather in the Yangtze Valley and the heavy rainfall in the the Yellow River River Basin had caused a great impact on cotton quality and yield.

In addition, because of the postponed sowing date this year, the impact on cotton production in northern Xinjiang should not be underestimated.

Mao Shuchun, a researcher at the Cotton Research Institute of Chinese Academy of Agricultural Sciences, said: "the cotton production situation in the three cotton regions is not optimistic at the same time. This is very rare."

With the rapid development of the textile industry, the supply pressure of cotton in China is also increasing.

According to the Ministry of agriculture statistics, since the beginning of this century, the amount of cotton used in spinning in China has increased by 10% per year, while cotton production has increased by only 5.8% during the same period, which is far from meeting domestic demand.

At present, the total amount of textile cotton in China is more than 10 million tons per year, while domestic output has been hovering around 7 million tons, and the gap between supply and demand has been increasing.

Especially since the second half of last year, China's textile industry has gradually bottomed out, textile exports have increased substantially, and demand for cotton has also increased significantly.

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At present, the world's annual export of cotton does not exceed 8 million tons, and Turkey, Bangladesh, Vietnam and other countries import about 5 million tons of cotton every year. The international market for China's cotton has been less than 3 million tons.

This year, affected by floods, most cotton fields in Punjab and Sindh provinces were flooded in Pakistan. According to the International Cotton Advisory Committee, cotton production in Pakistan has been reduced by at least 15% this year.

To make up for the shortfall of at least 300 thousand tons of cotton caused by floods, Pakistan is bound to need to purchase in the international market, which reduces the quantity of cotton that can be imported into China.

In fact, in the first half of this year, the shortage of imported cotton in our bonded area indicates that the price of cotton will be higher this year. In the past few years, the cotton stored in the bonded area of China's coastal ports is no less than 100 thousand tons at any time. But in July this year, the supply of cotton in the bonded area will become more intense.

Because imported cotton is also difficult to fill the gap between supply and demand of cotton in China, some people believe that China may enter the "high cotton price period". Even if the latter stage falls, it will hardly fall to the level of 03/04. This will not only increase the pressure of textile enterprises, but also increase the difficulty of national regulation and control of the cotton market.

Xinjiang cotton becomes the target of speculation?

Local people have revealed that this year cotton traders are far more than in previous years, with more people living in Wenzhou. Some cotton enterprises in Xinjiang say that although cotton prices have scared them, if everyone is fighting for resources, they must follow suit. "Shortage of supply and demand" and "price rise" are the most basic conditions for agricultural products to be hyped in recent years, and cotton is all there.

As early as the beginning of this year, some people and experts have asserted that Xinjiang cotton, known as "Platinum", will become the next target of speculation.

With the advent of new cotton, the size of "cotton traders" gathered in Xinjiang increased significantly compared with previous years. They ordered cotton fields locally, leasing production lines, and began large-scale intervention in cotton purchase.

After entering September, cotton traders, known as "self-employed" by local cotton enterprises, have been gathering in Akesu and surrounding cotton areas, waiting for the acquisition of new cotton. They live in Wenzhou.

According to the estimate of local main cotton enterprises, more than 200 self-employed households are looking for opportunities in Akesu this year, far more than in previous years.

Tianshan cotton industry is one of the largest cotton processing enterprises in Akesu.

At present, the company's 3 production lines, apart from one for personal use, the remaining two are for a textile enterprise in Dezhou, Shandong, and more than 20 self employed individuals from Wenzhou.

There are quite a few people in Wenzhou like other ginning companies who have leased the production line.

According to Fang Hongyan, general manager of Akesu Tianshan cotton industry, as early as June this year, most of the Wenzhou bosses had "scheduled" cotton in the local cotton fields, and promised cotton growers to buy cotton at a higher price than the market price, and at the same time leased the production line to local cotton processing enterprises ahead of schedule, preparing for the autumn acquisition and processing of cotton.

There are nearly 50 cotton processing enterprises in Akesu, most of which were built by businessmen from Wenzhou in Xinjiang around 2003.

Chen Shiwen, executive vice president of Wenzhou chamber of Commerce in Akesu, said that when cotton prices began to rise in February this year, "self-employed" came to Akesu to buy cotton, ready for hoarding, but at that time cotton was basically sold out, and most of the Wenzhou villagers returned empty handed.

Chen Shiwen said that because of this trend, the rumors of "billions of hot money moving to Xinjiang cotton fry" at the beginning of the year were noisy.

According to some cotton merchants in Wenzhou, although the Wenzhou people who are preparing for the cotton business do not have much money in their hands, they are only 23 million yuan per person. But when they combine themselves, they can quickly gather tens of millions of yuan or even hundreds of millions of yuan in purchasing funds.

Some cotton enterprises reflect that in addition to the Akesu region, a number of "self-employed" have appeared in various cotton regions of Kashi and Xinjiang, waiting for the acquisition of cotton.

Many foreign households to join the acquisition of cotton, not only exacerbated the competition for cotton resources this year, but also further raised the already high frightening cotton prices.

"This is likely to happen 6 years ago."

Chen Shiwen analysis said that in the autumn of 2003, in order to grab resources, foreign acquisition enterprises and cotton traders in Xinjiang competed to raise prices to compete for relatively limited cotton resources. When the purchase price of cotton was the highest, they were once fired to 10 yuan per kilogram.

Worried about the lack of cotton in the future, local businesses had to bite their teeth and play cards.

However, only 3 months later, domestic cotton prices plummeted, so the main cotton enterprises were generally losing money. Many cotton merchants in Xinjiang invested and built factories were also unable to escape. Most of the funds were trapped. Many people have not yet recovered all their investment so far, so they have to continue to "bother" for cotton. "Wenzhou"

Wen Shang Chen Shiwen said, "originally intended to make a profit, but eventually turned into an industry."

Over the next 3 years, cotton and cotton industry in Xinjiang and even the rest of the country experienced a "hard sell" dilemma, and the whole industry suffered heavy losses.

The fact seems to confirm some of the concerns of Xinjiang's cotton business.

After September 20th this year, in the southern part of Xinjiang, where cotton was opened earlier, the scale of cotton reached 11 yuan per kilogram, exceeding the highest price in history.

Some cotton enterprises in Xinjiang say that although cotton prices have scared them, if everyone is scramble for resources, they must follow up. Otherwise, factories, equipment and personnel will lose money equally.

Whether there will be any hot money for cotton speculation this year, Du Min, a researcher at the Ministry of agriculture's Rural Economic Research Center, thinks that the main reason for the sharp rise in cotton prices this year is due to the imbalance between supply and demand.

Du Min said that even if the cotton prices were raised, if the domestic textile enterprises could not afford it, they would not be able to take the last stick of "beating the drum and spreading flowers".

However, some people in the industry believe that China's cotton gap is increasing, which provides favorable conditions for the speculation of cotton prices.

After just experiencing the "stir fried garlic" storm, Xu Xiangyang, director of the economic crops Station of Heze Agricultural Bureau of Shandong, said: "shortage of supply and demand" and "price rise" are the most basic conditions for agricultural products to be hyped in recent years, and now cotton is also available.

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Since entering September this year, domestic cotton futures prices have surged by more than 6000 yuan in a short span of 40 days.

Liu Zhong, vice president of Limited by Share Ltd, a well-known textile enterprise in China, said that there was no hype about hot money, so it was hard to see such a situation.

Whether the hot money is really involved in cotton speculation remains to be seen, but only such rumors will cause market volatility and push up cotton prices.

For example, after the Spring Festival this year, there was a rumor that 10 billion yuan of Zhejiang private capital was evacuated from Shanxi coal mine and domestic real estate market to Xinjiang cotton market. Although this is not consistent with the facts, the domestic cotton price has risen.

Some people believe that money is profitable, and it is hard to put an end to its hype about the potential market of cotton.

The way to cut off speculation is to strengthen the supply of cotton and other related products and reduce the opportunity for capital speculation.

At the same time, it is necessary to make the amount of money supply to meet economic growth, avoid excessive currency nowhere investment, and seek opportunities everywhere.

Cotton production in Xinjiang has a certain deviation over the past seven years compared with the statistical data.

In analyzing the reasons for the continuous rise in cotton prices this year, some people in the industry believe that the misleading role of statistical data can not be ignored in addition to the tight supply of cotton.

Zhu Lanfen, vice president of China Cotton Textile Association, said that because of the discrepancy between data and facts, at the beginning of this year, when the policy of "importing cotton imports" was implemented, the import quota of the country was relatively small, which led to the shortage of domestic cotton.

Although the number of quotas issued by the NDRC was increased after May, there were not many cotton resources available in the international market at this time.

China's cotton supply and demand data "false" has a long history.

In recent years, not only the statistics of cotton output are inconsistent with reality, but even the actual planting area is difficult to understand.

In Xinjiang, the largest cotton producing area in China, the "help field" is one of the main reasons for the false statistics of output.

The so-called "help fields" is cultivated land that has not been reported but actually planted cotton.

According to Shao Yu, former director of agriculture in Manasi County, Xinjiang, the cotton yield in most cotton producing areas often means the high level of cadres' ability to work. In order to achieve more political achievements, it is very common to rely on "help fields" to increase yields.

Although starting from this year, farmers in Xinjiang will be able to grow cotton subsidies of 15 yuan per mu, although this can reduce the coverage of cotton fields at a grass-roots level to some extent, but it is still unable to solve the problem of unclear output.

In addition, according to a cadre of the Agriculture Department of the autonomous region, over the past few years, farms in the army, prisons and labor reform departments in the Xinjiang army have a large number of cotton fields, which are not included in the cotton fields in Xinjiang.

In recent years, most of the wasteland that has been illegally reclaimed in Xinjiang has been planted with cotton.

As early as December 2009, Shi Jianwei, vice president of the China Cotton Association, once said that the problem of distortion of cotton production data in Xinjiang has been very serious. According to the total amount of cotton produced by the Urumqi Railway Administration, the output of cotton in Xinjiang has been 2 million 800 thousand tons in 7 years compared with the statistics of relevant departments since 2002.

There is a discrepancy between the actual output of cotton and the statistical data. There is also a big discrepancy between the actual demand of cotton in China and the statistical data.

According to the data released by the National Bureau of statistics, in 2009, the yarn production in China was nearly 24 million tons.

Over the same period, the chemical fiber that our country can provide to the textile industry for spinning does not exceed 9 million 500 thousand tons, and cotton output is only 9 million tons of imported cotton. According to this calculation, the total raw material of spinning is not more than 18 million 500 thousand tons.

Zhu Lanfen said: "18 million 500 thousand tons of fiber actually produced 24 million tons of cotton yarn, which means that 6 million tons of yarn can not find raw materials. From this perspective, cotton production is not a problem, that is, the yarn production statistics is high."

Domestic cotton production and demand data "distortion", but also make the decision-making and regulatory departments headache.

Zhang Xianbin, director of the economic and Trade Department of the State Development and Reform Commission, said that the statistics of production and demand statistics were not true, which has been the biggest factor that troubled the country's regulation of the cotton market.

Due to the lack of authoritative and efficient information collection and comprehensive processing system for cotton production, supply and marketing, the regulatory basis of the state's cotton industry is weak, mainly because cotton production and demand statistics are not accurate enough, so it is difficult to achieve precise control.

Zhu Lanfen believes that the total output of cotton is underestimated and the output of cotton yarn is too high. The regulatory measures formulated by the functional departments such as the NDRC are difficult to "suit the remedy to the case", which will inevitably lead to this embarrassing situation this year.

In view of the fact that the production and demand data are not true, insiders say that the government should set up an objective and accurate data statistics system and early warning system as soon as possible, so as to ensure timely, systematic and accurate information release, reduce risks in operation and decision-making, and ensure the stable and sustainable development of China's cotton industry and textile enterprises.