Cotton Is Also Crazy: Supply And Demand Gap Brings Upward Pressure On Cotton Prices.

The skyrocketing cotton price has earned it the nickname of "cotton knives".

On the Zhengzhou Mercantile Exchange.

The sharp rise in cotton prices makes it difficult for the market to blame China for the disaster weather.

Ma Shuping, deputy director of the Ministry of agriculture of the Ministry of agriculture, said at the first "Zhengzhou Agricultural Products Futures (cotton) Summit Forum" that due to the low temperature and rainy weather during the sowing period, the whole growth period of cotton last year was postponed and the growth was not as good as in previous years.

In September 27th last year, Zhang Xiaoqiang, deputy director of the national development and Reform Commission, also stressed that the supply and demand of cotton is still in a tight balance. The uncertainty of the weather can easily lead to speculation and abnormal fluctuations in prices.

The decline in cotton planting area is also a driving force for capital speculation of cotton prices.

According to the national cotton market monitoring system, in 2009, domestic cotton consumption was 10 million 410 thousand tons, an increase of 5.2% over the same period last year. However, the cotton planting area in China decreased to 77 million 690 thousand mu in 2009, down 12.5% from the same period last year, the lowest level since 2003.

The decline in planting area also resulted in a relative decline in cotton supply in 2010.

The Yongan Futures Research Institute reported that the domestic seed cotton market continued to run hard in the bull market when resources were expected to tighten, and showed a high price of cotton producing areas.

The purchase price of 3 grade seed cotton has reached 5.5 yuan / Jin in local area, and the price of lint cotton is 25114 yuan / ton.

"The outbreak of cotton fundamentals has attracted the speculation of funds, and the simple knowledge of supply and demand imbalance has made the market pay attention to cotton," said Shanghai mid-term analyst.

Some experts said that the new year's cotton price or will continue to bear the bull market in 2010, from the cotton itself, the spot purchase cost will be one of the support of cotton city.

According to the statistics of new lake futures, the average purchasing cost of cotton in China started at the end of last September. The average purchase cost of cotton was over 24000 yuan / ton. At the end of October, the price of 26000 yuan / ton began to appear. Moreover, because of the late arrival of new cotton, the cotton purchased at a price of 26000 yuan / ton accounted for a large proportion.

The rise of cotton purchase price is undoubtedly the basis for cotton prices to continue to rise in the future.

From the point of view of supply and demand, the supply and demand gap of domestic cotton in the 2010 /2011 year is expected to be 3 million 701 thousand tons. Because of the large export policy variables in India, I am afraid that the international market may not have enough cotton to import in the future, and the domestic surplus resources are also insufficient.

Insiders say that the supply and demand gap will bring upward pressure on cotton prices until the end of 2010/2011 or around June this year.