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Cotton Prices Soared &Nbsp, And The Domestic Textile And Garment Industry Felt Cold Again.

2010/11/20 9:39:00 71

China

Cotton futures

The price has doubled in just four months, and the era of low cotton prices may never return. Facing the pressure of RMB appreciation and rising cost, the domestic textile and garment industry has just begun to feel chill.

Investor

How can we do the gold digging in the sand?

China's "12th Five-Year" (2011-2015 year) plan put forward the strategy of expanding domestic demand and the adjustment of industrial structure, emphasizing the improvement of residents' income and distribution reform, which helps to steadily increase the total consumption of textile and clothing and product upgrading, and further enhance the concentration of industries by market competition, which will become investment opportunities in the capital market.

On the surface, although large cotton production companies seem to be the beneficiaries of the soaring price of cotton, the increase of raw materials and labor costs has always been a long-term challenge for textile and garment manufacturers.

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European and American economies

Although there has been a rebound, it is still far from the pre crisis level. In the first half of this year, the pull back effect of the inventory growth in the export growth of the driving industry has subsided, and the export growth rate of the textile and garment industry is expected to further slow down.

"There are some irrational factors in the growth of (cotton and cotton futures). There will be some callbacks, but I do not think it will be easy to go back to such a low level." Xu Liang, a futures analyst in East Asia, said that the price of agricultural products would be a long-term upward trend because of the increase in land and labor costs.

The contradiction between supply and demand and capital push are considered to be the main reasons for the current cotton boom. Xu Liang believes that the low price of cotton for a long time has dampened the enthusiasm of cotton growers to plant cotton, resulting in obvious reduction in cotton planting area, so the contradiction between supply and demand imbalance has been concentrated this year.

The main shock area of major cotton futures contracts in the past six years is between 12000-16000 yuan / ton. By the international financial crisis, the contract fell to a record low of 10110 yuan / ton in 2008, up to 17000 yuan / ton in July this year, and then the rally suddenly accelerated. Last week, the highest price of the contract reached 33870 yuan / ton.

China is the world's largest cotton importer and consumer. Statistics show that in 2009, the country's cotton planting area was 495 hectares, a decrease of 800 thousand hectares over the previous year, and cotton output of 6 million 400 thousand tons, a decrease of nearly 15% over the previous year, a decrease of second consecutive years. According to Reuters survey, China's cotton output in 2010/11 is expected to be around 6 million 450 thousand tons.