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Cotton Production Is Expected To Continue To Increase.

2011/3/7 15:59:00 63

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Macro Policy For Increasing Cotton Production

In 2010, the cotton futures market went through a huge bull market. Cotton prices hit record highs. Can cotton continue to strengthen in 2011? We do not think there is enough evidence to prove that cotton can maintain a strong pattern in fundamentals and policies.

Gradual tightening of monetary policy

From the macro policy perspective, since the second half of 2010, the 5 increase in the country

deposit

The reserve rate, the 3 increase in interest rates, and policy tightening signals are very obvious.

Faced with increasingly serious inflation expectations, the state not only uses monetary policy to cool down prices of all kinds of products, but also uses various macroeconomic policies to stabilize prices so as to curb the growing inflation situation. This will inevitably affect the bull market confidence in the futures market.

Planting area is expected to grow

In 2010, cotton prices were at the top of the world's major agricultural product prices, and domestic and international grain and cotton prices were at a high level in the past 10 years.

The price of cotton in area competition in the new year will be higher than that of other competing crops.

According to ICAC2010's December report, global cotton output will reach a high level of 27 million 300 thousand tons in 2011, an increase of 2 million 320 thousand tons over 2010.

It is estimated that China's annual output will reach 7 million 210 thousand tons, showing a recovery growth trend compared with 2010.

The above data show that cotton production will increase significantly in 2011, easing the tight supply situation, and the possibility of downward pressure on cotton prices will be great.

Spinning enterprises

Inventory year-on-year increase

China's textile enterprises above Designated Size in December 2010

Cotton inventory

1 million 334 thousand and 600 tons, an increase of 23.3% over the same period last year.

Because cotton mills are cautiously optimistic about the price trend of cotton in the late stage, most enterprises believe that 3 and April are the time points for the market to flourish in 2011, so February is the time for centralized replenishment of textile enterprises.

Combined with the historical law, it is estimated that in February 2011, China's textile enterprises above Designated Size will reach 1 million 450 thousand tons of cotton, a new record high, an increase of about 28% over the same period last year.

The high storage of cotton textile enterprises makes the price of high cotton prices have no market price, and it still takes some time to go to stock, which also makes the price of cotton facing a larger downward adjustment space.

To sum up, after a year of ups and downs, cotton market in China is facing more complicated situation in 2011.

On the one hand, the increase of cotton planting area has a great pressure on cotton prices. However, compared with grain and other cash crops, there are many problems such as less subsidies, more work and more risks. On the other hand, the macroeconomic policies adopted by the state to control inflation will slow down the economic growth and also have a greater impact on the entire cotton production and processing industry.

From a fundamental and macro perspective, the uplink of cotton prices has narrowed down and the possibility of downlink has increased, hoping to attract investors' attention.