Cotton Prices Continue To Rise By &Nbsp; Profits From The Textile Industry Are Impaired.

The gap between production and demand makes cotton price overhang.

When it comes to cotton prices advancing all the way, analysts often mention new cotton.

Shanghai mid-term analyst saw thunder, said that the reason for the initial increase in cotton prices was the sharp reduction in global cotton production in 2009/2010. After entering August, the textile enterprises were "on the boil", and the domestic cotton spot market was out of sight.

The cotton harvest in the new year is late, the output is reduced, and the quality is poor. The 3 grade cotton that meets the textile demand is very few, which provides the conditions for the middle price rise of cotton.

New cotton continued to cut production, but cotton demand did not shrink.

The US Department of agriculture predicts that China's cotton output will be only 6 million 858 thousand tons in 2010/2011, a decrease of 218 thousand tons over September.

Global cotton production is expected to reach 25 million 404 thousand tons, a decrease of 60 thousand tons.

"According to the forecast of the US Department of agriculture, China's cotton supply gap is 4 million 28 thousand tons this year, which can be said to have set a new high.

According to preliminary estimates, the amount of cotton resources available for import in China this year is about 200-215 tons, which is far from our domestic supply and demand gap this year.

Liu Qing, an analyst at new lake futures, points out that domestic cotton supply and demand gap still exists.

"Because of the surge in cotton yarn prices this year, textile enterprises have been operating at the best level in nearly ten years, and have expanded their production capacity.

According to conservative calculation, cotton demand in the new year increased by 10%, and the gap between production and demand increased by at least 1 million tons.

Seeing the thunder, he told reporters about the results of the on-the-spot investigation.

Textile industry profits are gradually compressed

With the recent rise in cotton prices, cotton yarn,

According to the survey data of China's cotton information network at the end of September on the scale textile enterprises, the stock of textile enterprises in the end of September is 915 thousand tons, which is equivalent to a month's cotton consumption.

Before this part of the cheap cotton is consumed, the textile industry can still bear the current high cotton price.

However, reporters learned that some small textile factories have recently limited production and suspend production.

"At the current price of 33000 yuan / ton of 32 yarn, the textile industry will fall into a state of total loss when the price of grade three cotton exceeds 26000 yuan / ton.

Later, if the price of cotton yarn can not fully follow up, and the price cost can not smoothly downstream, then the scope of textile enterprises will be expanded, which will have a greater impact on cotton demand.

Fan Jun, an international futures analyst, said.

People in the industry sighed that at the moment of high cotton prices, the days of cloth factories and garment factories were even more difficult than that of the spinning industry.

The rapid rise of the cost of raw materials and the appreciation of the renminbi have brought unprecedented challenges to the domestic textile and garment industry. Some textile and garment enterprises with poor bargaining power can face the risk of loss or even bankruptcy if they can not pfer the cost pressure through raising prices.

The increase in cotton prices will affect downstream costs. On the other hand, downstream demand will also react to cotton prices.

Fan Jun, an analyst, said that if the cost of cotton prices was not smooth enough and the textile enterprises had a large number of discontinued production, the turning point of cotton prices would appear after the massive listing of new cotton, that is, after November.

If the price of late cotton yarn keeps rising or even rising, cotton will go up all the way, and there will be an inflection point until the new cotton planting area increases significantly in 3 and April next year.

Spot prices drive cotton prices

This year, due to adverse weather factors and so on, new seed cotton market has been postponed in China. The sale of state cotton and cotton from the end of August has eased the urgent need of cotton enterprises. During this period, throwing and storing became the main cotton supply on the market.

Due to the shortage of cotton in the market, the state increased 400 thousand tons on the basis of the original plan to throw 600 thousand tons of storage, and accumulated 1 million tons to the market, which ended in October 20th.

"Because of the shortage of cotton and the shortage of cotton supply in the new and old cotton handover year, the price of throwing and storing has also been increasing, rising from 18000 in August to about 25000 at the end of the year.

Since the purchase of seed cotton in late August, the purchase price has been rising rapidly, starting from the beginning of the scale of 4.15 yuan / jin (Level 3), to October 27th, has risen to about 6.15 yuan / kg, the price of lint cotton is nearly 27000 yuan / ton.

Analyst Liu Qing briefed reporters.

Fu Xiaoyan, an analyst with Nanhua futures, said that the base is gradually weakening from the trend of spot prices in the past two months and the trend of futures prices.

"Since the beginning of September, the base has been at a negative value and then reduced to normal.

From this point of view, such a high price is not normal, but the fundamentals of the market are still good, and seed cotton prices can also support the price rise when they are concentrated on the market.

Liu Qing also said that before the large number of domestic and foreign cotton markets were listed, the market supply tight pattern was hard to be alleviated under the premise of stable demand.