Who Controls Cotton Prices Behind The Back?

Affected by weather and other factors, China's cotton production will be slightly reduced this year, and demand is still growing. In addition, the bad weather of the main cotton producing countries such as India and the United States and the implementation of domestic cotton self-protection policy will lead to the soaring international cotton futures price. In China's cotton futures market, due to the lack of a moderate proportion of hedging, the main structure of the participants is unbalanced and the proportion of speculation is too heavy, a large number of irrational short-term speculation may cause abnormal fluctuation of futures prices, which affects the effect of the existing enterprises participating in hedging.

"This one.

"Mainly affected by the rising price of cotton."

A shopping mall official told reporters that cotton prices continued to rise at the end of last year. The current cotton price has reached 20000 yuan per ton, up 58% and 36% respectively over the same period last year and the beginning of this year, which directly led to the general price increase of cotton products.

Under the pressure of purchase cost, clothing dealers have chosen to raise the retail price.

Recently, the soaring prices of all kinds of agricultural products are deeply affecting the market and people's lives. Affected by weather and other factors, China's cotton output will decrease slightly this year, while demand is still growing. In addition, the bad weather of the main cotton producing countries such as India and the United States and the implementation of domestic cotton self-protection policy have led to the soaring international cotton futures price.

Textile enterprises will face losses. Shandong is a traditional cotton producing area.

"90% of the company's products are exported to Australia, Japan and other markets, and cotton prices have increased by 60%-70% over the same period last year, making the company at a loss."

Jiang Luming, deputy head of knitted Limited by Share Ltd of Ji'nan head of state, said.

The price of raw materials has gone up, and the wages of workers are also increasing.

"I used to produce 1 yuan of white cloth for one meter, and now I make one meter of white cloth and I lose one to two cents."

Jiang Luming said.

According to the Shandong Textile Industry Association, from the current production situation of Shandong cotton textile industry and the price of cotton yarn, the company still has considerable profits.

But once the stock of cotton is used up, whether the price of cotton and cotton can be sustained will cause the downstream to be unable to eat. This is the industry's concern.

Who is deciding the right to speak cotton?

China is the largest cotton producing country, cotton consuming country and largest cotton importer in the world, and already has its own cotton futures varieties listed on its own. It should be said that China is the country that has the pricing power of cotton.

But this rally began with the intercontinental futures exchange.

Although China has become the largest cotton producing country, consumer country and importing country in the world, because of the single and backward way of operation of most cotton merchants in China, domestic cotton can not give full play to its huge output advantage in international competition, especially in deciding the international cotton price.

Song Hong, director of the International Trade Research Institute of the Institute of world politics and economics of the Chinese Academy of Social Sciences, believes that in recent years, speculation in US funds has led to a surge in global commodity market prices, which of course includes cotton.

When there is a lot of money to buy cotton futures contracts, even if the output is high, cotton prices will remain high.

Song Hong said that the US cotton industry enjoys high government subsidies, which is unfair to cotton farmers in other countries, including Chinese cotton growers. Chinese cotton growers are paying for this expensive international trade.

There are also industry experts believe that the United States can firmly control the international cotton pricing power, in addition to benefit from the U.S. government to give high subsidies to the cotton industry, there is another important factor, that is, futures trading oriented pricing system.

Professor Zhu Guohua, a famous futures legislative expert and professor of Shanghai University of Finance and Economics, said that because of lack of support from bank credit funds, cotton business enterprises can not participate in risk management in hedging pactions, and have strong contrasts with western developed countries' financial support policies for their agricultural products enterprises.

According to Zhu Guohua, hedging loans are the main "silver cooperation" business in western countries. Before lending to enterprises, commercial banks require them to hedge commodities through futures market, so as to reduce the risk of loans.

Most farmers in the us avoid the risk of spot market through futures market and promote the development of cotton agriculture in the United States.

In China's cotton futures market, due to the lack of a moderate proportion of hedging, the main structure of the participants is imbalance and the proportion of speculation is too heavy, a lot of irrational short-term speculation can make the abnormal fluctuation of futures prices affect the existing enterprises' participation in hedging, and further increase the suspicion of the value preservation function of the futures market, thus forming a vicious circle.

In recent years, Chinese farmers are abandoning cotton planting as China's largest cotton producer in the world. Cotton planting area has been reduced step by step. In 2 years, the planting area has decreased by 14 million mu.

According to a survey, cotton farmers' confidence has been frustrated and their planting area has been reduced due to low cotton prices in 2008.

Statistics show that China's cotton output in 2009 was 6 million 400 thousand tons, which was 1 million 100 thousand tons less than that in 2008, with a drop of nearly 15%.

On the other hand, last year, cotton production in Xinjiang and other main cotton producing areas decreased by nearly 1/4 due to climate disasters and other reasons, which further aggravated the contradiction between supply and demand imbalance.

The main problem that affects cotton growers' enthusiasm is efficiency.

In addition, China's cotton production is still lagging behind the developed countries such as the United States. Low productivity and low efficiency are the main reasons why more and more farmers are unwilling to grow cotton again.

Eric Orsenna, a writer of the "cotton country tour", has always described China as an image of a superpower in the cotton textile industry. Later, when he came to China, he found that the 300 kilometers of the journey from Shanghai to Zhejiang were all factories, but could not see the imaginary rice fields, bamboo forests and cattle herding.

National regulation and control: frequent selling of reserves to crack down on speculation {page_break}

According to a report released by the US Department of agriculture in early October, the global cotton gap in 2010 /2011 was 890 thousand tons.

Tight supply has made cotton prices on the international market continue to climb. Cotton futures prices in New York began to rise in late July and have risen nearly 70% so far.

In order to stabilize domestic cotton prices and solve the problem of shortage of raw materials in textile enterprises, the national "regulation" hand is also playing an important role.

In early August of this year, China's implementation of the plan to sell cotton reserves dropped 1 million tons in October 20th.

The total volume was 1012336 tons, the actual turnover was 1002736 tons, and the turnover rate was 99%.

The national development and Reform Commission recently convened a joint meeting on cotton macro-control, analyzing the situation and studying the measures to stabilize the cotton market.

It is requested that the relevant departments should jointly make efforts in accordance with their respective division of labor, rectify market order, crack down on malicious speculation and other disrupting market order, and make other regulatory plans.

"Weather, arable land and other factors do exist, but without huge capital push, it will not be so crazy."

A grain analyst said.

For people, the memory of cotton is always warm: not only because of the new cotton padded jacket that they like when they are young, but also the splendid yellow and white flowers in the summer when the cotton is blooming in the summer, which constitutes the eternal sight of the village. However, today it is still everywhere: People's cotton cloth, daily paper money and medical cotton swabs all come from cotton.

From the raw material supply of cotton to the interior of Africa, Mali began, to the United States cotton market, to cotton as "white gold" of Uzbek, and finally arrived in China, a major cotton textile industry.

Cotton is always cotton, but people and culture are very different. There are various government and agricultural policies that lead to the ups and downs of cotton prices.

Eric Orsenna once asked thousands of Chinese workers why he worked so many lives, and the first answer he had got was: to live a better life.

Yes, this determination and confidence in self improvement is the secret of China's rise in a generation, and cotton is only part of a better life.