How To Avoid "Cotton Mad" Comeback?

"Cotton crazy" swept across the 2010 annual "Crazy" situation still exists.

Butterfly Effect fanned "cotton mad"

In 2010, cotton prices continued to skyrocket, breaking the highest level in nearly 10 years.

Since September, China

As cotton prices have risen so rapidly, Kong Xiangzhi, vice president of the school of agriculture and rural development of Renmin University of China, said the main reason is that supply and demand affect prices.

Kong Xiangzhi analysis: "supply is still insufficient, demand has been rising, leading to price rise, from the point of view of supply and demand, this is inevitable.

Last year, production is declining. We import these years every year. Cotton imports have decreased this year, such as India abruptly prohibit cotton exports, and cotton in other countries has not yet come, there is a process.

It is possible to alleviate this contradiction after coming. "

According to analysts, a 100 year rainstorm caused a sharp rise in cotton prices.

In July 2010, -8 suffered a 100 year flood in Pakistan, and cotton production decreased by nearly 30%.

As a fuse, this led to a "cotton mad" sweeping the world.

Like the butterfly effect, after the combination of various factors, the "cotton madness" gets bigger and bigger.

"Natural disasters" and "man-made disasters"

There are many reasons for the rising price of cotton.

A staff member of China Cotton Association said that due to the impact of the international financial crisis in 2008, the cotton prices were low, which affected cotton growers' enthusiasm for planting cotton, and the cotton planting area in the whole country decreased significantly.

After the financial crisis, the demand for cotton increased sharply, and there was a gap between cotton production and demand, which contributed to the rise of cotton prices.

According to a staff member of the cotton Bureau of an Agriculture Bureau, farmers' cotton planting costs a lot of time and effort, and the growing cost of cotton planting in recent years has greatly dampened farmers' enthusiasm for planting cotton.

In addition, due to climate reasons, the main cotton producing areas in eastern China suffered serious disasters this year, resulting in a large reduction in production.

During the cotton pollination period, the rainy weather in Hebei, Hubei, Anhui and Shandong seriously affected the quality and quantity of cotton peaches.

At the same time, many provinces in southern China suffered huge floods.

A market report predicts that the flood will lead to a reduction in cotton production in China by 5%~10%.

In mid November, the China cotton reserve management company said the preliminary results showed that the quality and yield of cotton had been adversely affected due to the low temperature during the sowing period and the continuous heavy rainfall in 2010.

In 2010, the cotton planting area in China was 75 million 682 thousand mu, 1.1% less than that of last year. The output per unit area was 84 kg / mu, 4.4%, the total output was 6 million 360 thousand tons, and the reduction was 5.5%.

At the same time, the change of international cotton supply and demand also has an impact on domestic cotton prices.

According to reports, the main cotton producing areas in the world are affected by disaster factors, production is down, India has reduced cotton exports, and the low US dollar has driven cotton futures prices higher. These superposition factors have boosted China's cotton prices.

In addition, the rise in cotton prices has also caused the speculation of idle capital and the reluctant sale of cotton farmers.

Relative to the reduction of cotton production, market demand for cotton has increased.

After the financial crisis,

Futures manipulation "cotton prices soaring"

Speculators profit nearly 8 times.

The underestimation of cotton value has resulted in a reduction in cotton production. The rise in cotton prices may be the return of cotton value.

But because of the rise of cotton prices, there is a figure of futures, which makes cotton price rise beyond expectations and is divorced from the real value of the product.

Gao Boxuan, senior researcher of China investment consulting, analyzed that cotton prices rose significantly this year, and the underlying reason for this phenomenon lies in the hype of the market.

China's cotton price has basically been in line with the international cotton price. The high price of the international cotton price has promoted the rise of domestic cotton prices. In addition, the import volume of cotton in China has increased significantly this year. In the case of demand growth, international capital has been hyping up cotton prices, and domestic capital has also been following the trend of speculation, causing the price of cotton to skyrocket.

As a large number of speculators put money into futures, buying more bills and pulling futures prices up, spot prices also rose again.

And these speculators gained substantial profits during this period.

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Futures traders calculated an account: in July 28th, the price of 16600 yuan / ton was raised, and the margin rate was 11%. The required freezing margin was 16600*5*11%=9130 yuan.

The position has been closed at the opening of October 15th, the paction price of 24680 yuan / ton, profit of 40400 yuan.

July 28th -10 15, Zheng cotton rose 49%, holding Zheng cotton contract profit 4.5 times, leverage 9 times.

July 28th -11 5, Zheng cotton rose 87%, holding Zheng cotton contract profit 8 times, leverage 9 times.

Reporter note: before the price rise of cotton, the cotton price is low because of the economic crisis. The cotton farmers' income is not ideal, resulting in the reduction of cotton farmers.

After the rise in cotton prices, part of cotton farmers' hands have been bought and sold in advance by "willing people". Cotton prices have begun to fall when cotton farmers want to sell high cotton prices.

Nowadays, prices are continuing to rise. The drop in cotton prices has left cotton farmers in a very unbalanced mood. A cotton seesaw battle has started.

It is to be said that in this "cotton madness" the most profitable one is the speculator in the futures market.

If the operation is reasonable, the benefits will be at least 4 to 5 times, and 8 times higher.

"Cotton mad" blow down small and medium-sized textile enterprises

As the textile industry in the early stage is getting warmer and faster, and the industry is booming, the inventory of domestic textile enterprises is also at a low level, and the inventory of some textile enterprises is generally in the range of half a month to a month.

The continued boom in cotton prices has made these textile enterprises panic.

Cotton price too high order = loss

A textile company official said that the price of cotton yarn has been unstable since the first half of 2010, and sometimes the supply of goods is also very tight.

In September, as cotton prices soared, the price of cotton yarn was one price per day, and the increase was one thousand or two thousand yuan.

When spinning enterprises face cotton prices "one day, one sample", they can only suspend their contracts with customers.

Some small cotton spinning enterprises are facing a dilemma because of low bargaining power: the high price of upstream cotton producing areas and the downstream foreign trade enterprises are afraid to take orders.

Similarly, foreign trade enterprises are faced with the dilemma of "single can not do".

Feng Kejian, general manager of Shaoxing Yijia textile foreign trade company, said that the price of grey cloth has increased the profit space constantly compressed. The 10% profit space that was originally discussed is likely to be compressed to 5% or even lose money at once.

According to statistics, from the new cotton market in September 10th to September 25th, only half a month has passed, and the price of ordinary cotton yarn has risen from 26000 yuan / ton to 33000 yuan / ton, and combed cotton is more than 35000 yuan / ton.

In fact, the profits of China's textile industry are very thin, even below 3%, so once cotton prices rise sharply, enterprises can only choose to raise prices.

At the same time, as the RMB appreciation rate has also accelerated significantly recently, export oriented textile enterprises are facing not only the pressure of rising costs, but also the profits of the RMB have vanished.

Under heavy pressure, in Shaoxing, Xiaoshan and other places, many textile enterprises either increase their prices or simply choose to destroy or stop production in order to avoid losses.

It is not allowed to sell now.

Jin Feida (quotes, information) suffer from "zero inventory"

Cotton prices continue to soar, leaving many garment manufacturers losing profits.

Cotton generally accounts for 60% to 70% of the cost of cotton spinning enterprises. According to the average profit of about 12% of the industry, cotton prices increase by 1% each, and the profit margin of enterprises is reduced by 0.53%.

If we calculate the cotton price by 50%, the profit will drop by 26.5% in one month.

The rise in cotton prices has not only threatened small textile enterprises, but also affected the strength of listed companies.

Most of the listed companies of textile enterprises said they would raise product prices to deal with the rise in cotton prices.

As far as the cost of the products up to 100%, the net profit of the company has to slide again and again.

Kim Feida internal staff said that because of excessive cotton prices, fabric prices continued to rise, and the price of the company's products can not be raised too fast, which makes the company's profits fell sharply.

Kim Feida said that the reasons for the change in performance were the rapid increase in cost factors such as domestic fabrics, accessories, exchange rates and employment. Two, the net profit of the previous year included 2 million 900 thousand yuan of non recurrent proceeds from the sale of shares.

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Kim Feida internal staff told reporters that cotton, Renminbi, wages have risen, so that the company's profits shrink again.

According to the insiders, unless there is a cotton production base, otherwise, the company should have a certain stock of raw materials, which can avoid the risk of rising cotton prices. Now the companies that are buying and selling are the most vulnerable, and can only passively bear the high cost brought by the rising raw materials.

Take precautions --

High inventory to deal with "cotton crazy"

Before the decline of cotton prices, for some strong textile enterprises, they can rely on abundant inventory to cope with the current pressure of rising prices or directly develop their cotton planting base.

The craziness of the cotton market in 2010 was actually a harbinger.

In August 12th, the US Department of Agriculture announced the forecast of cotton supply and demand. The inventory of cotton at the end of the 2010/11 year was reduced to 45 million 610 thousand bales (1 packages of 500 pounds), and the consumption rose from 119 million 700 thousand packages to 120 million 870 thousand packs.

The international cotton futures market began to pick up when it saw that the low inventory was experiencing high consumption.

A textile enterprise official said that the cotton production reduction information was circulated in the industry at the beginning of the year.

At the beginning of this year, some domestic textile giants with strong capital began to hoard cotton.

China Cotton Association August industry Description: "large and medium-sized enterprises are very stocking at present, and some large textile enterprises have 6 months of cotton consumption."

In the past two years, their inventories were even less than 1 months' consumption.

Reporters interviewed Fu Tian shares, Lu Tai A, Shanshan stock (quotes, information) and other textile listed companies, found that these enterprises have high inventory situation.

The staff of the Securities Department of the stock group said to the reporter that the company has more stock and can guarantee production until next February, so the company will not purchase raw materials in the near future.

The above staff said to reporters that after the Canton Fair in November, the order of each enterprise will be reduced because of the increase in the price of cotton. After all, the price of the product is raised too much, and the customers will not accept it.

After that, the price of cotton will be lowered accordingly when the demand for cotton is reduced.

Considering that the cotton price will probably be adjusted after the first 11 months of this year.

Fu Shi shares are sitting on a large stock of raw materials, which can avoid the high price of cotton and slowly wait for the "cotton madness" to gradually calm down before buying raw materials.

Similarly, Lu Tai A also told reporters that he would wait for a good time to buy Cotton under adequate inventory conditions.

Reporter note: for production enterprises, the general profit margin is relatively low, and it is more sensitive to the price changes of raw materials. It is difficult to rely on their own ability to digest the rising pressure of raw material prices, and the differentiation of industries will further aggravate.

After a period of high cotton prices, textile enterprises have begun to consider building their own cotton production base. The feeling of being choking on their necks is not pleasant. If they can supply raw materials, it is not a bad thing.

At present, many textile enterprises have begun to improve their own industrial chain.

For example, Luen Fat shares (quotes, information) had invested ideas in Xinjiang a few years ago, but it has not been able to go until after the cotton price boom, we decided to set up a cotton base to achieve self-sufficiency.

"Cotton madness" promotes the upgrading of textile enterprises

When you eat meat, I drink soup.

The cotton related industry began to thrive as the "cotton mad" blows.

Gao Boxuan, a senior researcher at CIC, believes that the impact of cotton prices on Listed Companies in different positions in the textile industry chain is different.

For the upstream spinning enterprises, because of mastering the raw material advantages of textile manufacturing enterprises, the price of cotton yarn has been greatly improved, which has greatly promoted the growth of business performance; for apparel manufacturers, the rise of costs has resulted in a sharp decline in profit levels, and the performance of the company has been seriously affected. For the downstream garment enterprises, many brands with strong influence have achieved rapid growth because of the large number of orders and the strong bargaining power, and the gross margin level has also maintained at a relatively high level, and the growth of their performance is ideal.

Blindly stir frying cotton enterprises --

Share price is not directly proportional to earnings.

According to the insiders, cotton prices rise, first of all, conducive to cotton planting, cotton farmers benefit.

Affected by this news, new agricultural development (quotes, information), new shares (quotes, information) stock prices rose steadily.

The two class market showed that the price of new agricultural development in November 8th was up to 20.86 yuan / share, and began to decline after November 11th, and by December 31st, the development of new agriculture was closed at 15.97 yuan / share.

At the same time, the stock price trend of new Sai shares is exactly the same as that of new agriculture development. In November 8th, the stock price reached the highest level of 20.26 yuan / share, and it closed at 14.89 yuan / share in December 31st.

According to a reporter's investigation, three quarterly reports found that the profits of the two companies did not increase substantially because of the rise in cotton prices, of which the net profit of the new shares was actually a loss.

After investigation, the reporter found that the development of new agriculture suffered floods in August 2010, and the direct economic loss is estimated to be about 50 million yuan.

It is understood that at 5 a.m. on August 12, 2010, NNK farm, a subsidiary of new agriculture, encountered the flood of Hotan River.

Up to now, the area of the affected cotton fields has been estimated to be about 2 mu, and some houses and agricultural facilities have been damaged. The direct economic loss is estimated to be about 50 million yuan.

New agriculture development said that this flood will adversely affect the main business income of the company in the second half of the year.

Compared with the natural disasters developed by new farmers, it is inevitable that the losses of the new shares will come from the poor management of their own industries.

Three quarterly report shows that the net profit (merger) of new Sai shares is -2851.45 million yuan, an increase of -3726.19 million yuan over the same period last year, an increase of -425.98%.

New Sai shares said that since the first half of the year, sales of cotton and cotton yarn products have been booming, gross profit margin has increased considerably over the same period last year, while the price of oil products has been running low in the first half of the year, and the cost of products is much higher than the market price. The price of oil and byproducts has increased recently. Gross margins are larger than that of the same period last year, which seriously affected the current profit situation of the company.

High cotton prices promote industrial upgrading

In addition to the listed companies producing cotton, there are still some spinning enterprises that can achieve substantial profits during the rise in cotton prices.

In 2010, while cotton prices were rising, the price of textiles was still unable to keep up with the cost growth, even though textile companies were also raising their prices. Under such circumstances, domestic textile enterprises had to consider changing their own business ideas.

More textile enterprises begin to adjust their product structure and manage special products.

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The company's production of Western-style clothes is a product of high added value. The price of the products mainly comes from the brand effect of the company. The proportion of the cost is relatively small, and the fabric of the production suits is mainly wool, so the impact of the rise in cotton prices on the company is much smaller.

It is understood that similar products such as wedding dresses, evening gowns and outdoor sportswear belong to the "special" products of the textile industry. The market demand is relatively stable, and is a high-end product. A slight increase in prices will not affect the volume of market purchases.

In addition to adjusting the export market and export products, the innovative technology has also won a gratifying profit margin for enterprises.

Guangzhou South earth clothing company combines ordinary jeans with "Guang embroidery" to increase the added value of ordinary jeans and increase the price.

It can be seen that for small and medium-sized textile enterprises with tight funds, efforts must be made in new product development, brand cultivation and other aspects, so as to improve the technological content and added value of products.

Du Min, director of the rural economic research center of the Ministry of agriculture, said that for textile enterprises, efforts must be made in the field of new product development, brand cultivation and so on, so as to pform traditional industries and increase the added value of products so as to truly grasp the bargaining power and initiative of the international market.

"Cotton prices will accelerate the reorganization and integration of the textile industry, promote the concentration of the industry to rise, and a number of small and medium-sized enterprises will be eliminated, which is also the general trend of industrial adjustment."

Reporter's note: cotton price rise has limited impact on brand clothing enterprises. Most of the market based brands can be pferred by raising prices and new product strategies. The price range of autumn winter clothing is generally over 10%, and the discount intensity is also significantly reduced.

The clothing plate presents the characteristics of consumption upgrading and brand contribution, such as the seven wolves (quotes, information), the stock of red beans (quotes, information), and the news birds (quotes, information).

Cotton prices remain rising potential for cotton minimum protective price measures

In November 8th, the 7 departments of the national development and Reform Commission issued urgent notices and put forward 6 measures to maintain order in the cotton market.

The notice requires that relevant departments should strengthen the quality supervision of the cotton market, focus on strengthening the management of rural cotton brokers, and seriously investigate and punish illegal activities that disrupt market order and fail to fulfill quality obligations.

In the view of the industry, the central bank recently raised the reserve requirement ratio of banks again, forming a strong expectation of shrinking liquidity, which caused the crazy cotton market to be suppressed before, and cotton prices fell down.

Although cotton prices have been slightly adjusted, most industry analysts believe that cotton prices are still rising steadily.

Cotton prices will be high in 2011.

In November 11th, the cotton futures market plunged rapidly, which became an important turning point of cotton prices this year.

The cotton futures main contract of the Zhengzhou mercantile exchange continued to fall sharply from the same day. The settlement price in November 18th was only 26955 yuan / ton, while the previous highest offer was 33720 yuan / ton in November 10th, and nearly 7000 yuan per ton.

Cotton prices continued to fall, many cotton enterprises in Kuitun and Akesu began to reduce purchase or even stop production, while textile enterprises were pessimistic and unwilling to buy new lint.

The ferocious cotton price has been putting Xinjiang's cotton industry chain in an impasse.

"When the price of seed cotton is soaring, cotton processing enterprises do not dare to purchase large quantities of products. Even if cotton lint is produced, no cotton spinning enterprises dare to accept the dishes."

Hong Ping, deputy general manager of the largest lint sales company in Shihezi and the silver force cotton industry group (Group) of Western Xinjiang, said that the price of Cotton Traders and processing plants was "high" when prices were rising, but in fact, most of them had no market price, and few cotton textile enterprises that dared to buy large quantities.

At present, prices are falling, and most enterprises are at risk of losing money, so they all take a wait-and-see attitude.

Recently, China's rural policy implementation report released in 2010 by the rural economic research center of the Ministry of Agriculture said that domestic cotton prices have repeatedly hit record highs.

The average monthly price of grade 328 cotton rose from 14932 yuan / ton in January to 24701 yuan / ton in October, up 80.9%.

It is expected that prices will be high and volatile in the later period.

How to avoid "cotton crazy" comeback

The "cotton Craziness" that swept the entire textile market came to an end, and the relevant departments began to consider how to solve the problem of cotton gap.

Li Ruzhong, deputy director of the cotton research center of Shandong Academy of Agricultural Sciences, believes that the state should consider the long-term consideration and introduce relevant policies to stabilize the cotton planting area and expand the total output. At the same time, through the input of science and technology, increasing the yield per unit area and guaranteeing the domestic cotton ratio of not less than 70%, so as to basically safeguard the safety of the entire textile industry.

It is understood that in order to ensure the supply of cotton, India, Pakistan and the United States and other places have given strong support in policy.

Statistics show that India, the largest producer of cotton, has established the lowest supporting price of cotton, and has subsidized cotton development through the India Cotton Corp. Pakistan has also established the price of cotton protection. Since 1994, Mexico has implemented an agricultural plan to subsidize cotton growers for more than three years, with a subsidy of US $73 per mu, and a 129 yuan subsidy for plant protection.

In addition, the US cotton growers enjoy a subsidy of up to 89% from the US government, that is, the government subsidy of US $89 per US $100, effectively ensuring the stable production of US cotton.

Cotton growers in China currently enjoy only 15 yuan per mu of good seed subsidy.

Comparatively speaking, the foundation of China's cotton industry is extremely fragile.

Du Min said that the instability of cotton prices is an important reason for the enthusiasm of farmers to grow cotton. The state should adopt a minimum protective price measure for cotton and launch it at an appropriate time to ensure the interests of farmers.

"The policy of macro adjustment of the state should be further increased in terms of grain subsidies, agricultural subsidies and agricultural insurance, including the construction of cotton bases, so as to enhance the comprehensive production capacity."

Du Min said.

Reporter note: facts have proved that international import can not fundamentally solve the problem. The key issue is how to improve domestic cotton production.

After the fall in cotton prices, cotton farmers in China reached a small climax, but cotton farmers said, "everything is rising, and cotton is falling, and the more it falls, the more it will not sell."

At present, the phenomenon of hoarding has appeared. Cotton growers are looking forward to the price rising, while the processing enterprises think that the price of cotton is too high to buy.

How to grasp the balance between them and take the opportunity to raise the enthusiasm of cotton growers has become a new problem.