For The First Time, Cotton Enjoys A Government Protective Price Of &Nbsp, And The Gap Between Supply And Demand Still Reaches 4 Million Tons.

The industry calls for a few years of cotton (28170, -285.00, -1.00%) minimum protection limit measures, will be implemented in September this year.

In March 30th, 8 ministries, including the national development and Reform Commission and the Ministry of agriculture, jointly issued the 2011 year.

The number of respondents indicated that this approach is similar to the minimum protective price of grain.

Calculated, after the new cotton market came into operation in September, the lowest acquisition price of standard grade seed cotton was about 4.7 yuan / Jin.

When the new cotton was just sown, the price of the bottom was announced. The government intended to stabilize the cotton planting area.

Due to concerns about cotton and grain competition, the government has not set the minimum protective price for economic crops cotton.

Around 2008

Shandong cotton and linen supply and Marketing Association, a person who has just completed the cotton planting investigation, revealed that according to the current price, the standard grade

Policy underpinning: ensuring cotton seed area

According to the plan for the temporary storage and storage of cotton in 2011, the lock-in areas are located in 13 provinces (districts and cities) of the main cotton producing areas of China, namely, Tianjin, Hebei, Shanxi, Jiangsu, Anhui, Jiangxi, Shandong, Henan, Hubei, Hunan, Hunan, Hunan, and Hunan.

Before planting cotton, the state formulating and announces the price of temporary cotton picking and storage of cotton in main cotton producing areas. Cotton farmers and cotton enterprises can make their own production plans ahead of time. When new cotton is listed, when the market price is lower than the temporary storage price, the state will open up and store it.

The reference price of purchasing and storing is the average cotton price monitored by the two units of the national cotton market and the China Cotton Association. Once the monitoring price is lower than 19800 yuan / ton for 5 consecutive working days, that is to say, it will initiate policy purchasing and storage.

This reference price will be announced daily.

China has included cotton in cash crops, and has never enjoyed the market support policy of wheat (2833, -34.00, -1.19%) and corn (2393,13.00,0.55%).

Du Min, a researcher at the Ministry of agriculture's Rural Economic Research Center, said that in fact, China's accession to the WTO allowed China to implement less than 8.5% of the subsidy for cotton, which is estimated to be around 5 billion -60 billion yuan per year.

Unfortunately, this subsidy is far from enough. In 2009, for example, the government only invested a total of 1 billion 300 million yuan in cotton seed subsidy.

The minimum purchase price policy of cotton was ready in 2006. At that time, the policy failed to materialize because of the disputes on the formulation and implementation of the protective price.

Close to the Ministry of agriculture, analysts told reporters that the deeper reason is that cotton prices have been at a higher level, cotton sales are tight, which makes the relevant departments believe that the need to introduce a minimum price is not large.

Before and after 2008, cotton prices continued to slump, and the market price of standard grade seed cotton was less than 3 yuan / kg. Cotton's slow sales had damaged cotton growers' enthusiasm for cotton production.

Wang Qianjin, an analyst at the first textile network, said that a large number of cotton farmers had abandoned their cotton crops, resulting in the planting area of cotton decreased from 89 million mu in 2007 to 75 million mu in the year, and dropped by 1400 mu.

In March this year's national "two sessions", the draft national economic and social development plan issued by the national development and Reform Commission (NDRC) pointed out that in 2010, the yield of cotton was 5 million 970 thousand tons, which was 6.1% lower than that of the previous year, due to the partial climatic conditions and the reduction of planting area. In 2011, the goal of the national economy was to strive to reach 6 million 800 thousand tons of cotton output in 2011.

A person from Xinjiang cotton and linen supply and Marketing Association said that Xinjiang has entered the new cotton planting season.

He calculated roughly, without considering the labor cost of cotton growers. The cost of physical and chemical cotton planting in Xinjiang is about 3.5 yuan per catty of standard grade seed cotton. According to this standard, the lowest price of 4.7 yuan is set low.

He predicted that the annual planting area in Xinjiang is expected to increase by about 4%.

At present, Xinjiang's cotton output accounts for about 1/3 of China's cotton output.

The Shandong cotton industry has obtained two sets of reference figures after investigation: taking into account the disaster of last year, in the case of 410 kg of seed cotton per mu, when the standard grade seed cotton sells at 4.5 yuan / Jin, the income of farmers' grain and seed cotton is basically the same; in normal years, according to the figure of 520 kg per mu, the seed cotton price of 4 yuan / jin can be equal to the grain yield.

However, the timing of the minimum protective price policy may be lagging behind.

Take Shandong as an example, farmers in some areas have planted wheat last autumn, leaving the number of vacant land for planting cotton relatively fixed, and the market price has little effect on the stability of such areas.

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In fact, due to soaring cotton prices in 2010, the industry has forecast the increase in cotton planting area this year, but the average growth rate is only around 5%.

The cotton planting intentions survey conducted by the China Cotton Association in March showed that the cotton growing area in most parts of the country increased, due to the high level of cotton purchase price, but the growth rate was limited by labor force, cost and comparative benefits. It is estimated that the area of cotton planting in the whole country is 80 million 960 thousand mu, and the growth of the same diameter is 5.1%.

Long Xi, deputy director of the Department of cropping industry of the Ministry of agriculture, said at the Changsha conference of the China Cotton Association recently concluded that the reasons for the limited growth of the planting area are mainly two points: first, the grain purchase price has risen since the beginning of this year; two, although the cotton price is very good this year, it is still much worse than that of the migrant workers.

The gap between supply and demand is still up to 4 million tons.

A market analyst said that the introduction of the cotton minimum price policy, in fact, also has the government's management of inflation considerations, stable planting area, stable production expectations, help to control the current high cotton prices.

China's cotton price has soared since last year, and the spot price of standard cotton has risen from 13 thousand yuan / ton in 2009 to about 30 thousand yuan per ton.

Behind this, imbalance between supply and demand and capital speculation are the two biggest drivers of cotton prices.

Gao Fang, Secretary General of the China Cotton Association, said at the Changsha conference that from the data of 2010, because of the difference in statistics data, according to the consultation data of various departments, it is estimated that the output of cotton in 2011 is only 6 million 700 thousand tons, while consumption is expected to be around 11 million tons.

This means that the supply and demand gap of cotton in this year is roughly 4 million tons. In the case of limited reserve cotton, an estimated 3 million tons of gap should be made up through imports.

The head of a large cotton spinning enterprise in Guangdong said that the industry generally estimated that the new cotton price in the new year should be in the range of 22 thousand yuan -2.5 million yuan / ton after the new cotton was listed in September, which is also considered a reasonable area for cotton farmers, spinning enterprises and other interests to be balanced.

"The minimum price policy is unlikely to trigger."

He said it is hard to believe that cotton prices will fall below 20 thousand yuan / ton.

Soaring cotton prices have shown signs of lack of support for end demand.

Wang Qianjin said that from the cotton policy of cotton farmers and insurance companies, stabilizing prices is beneficial to the two parties.

Because of the rising cost and the expected appreciation of RMB, the price range of China's textile and clothing exports is generally 5%-10%.

"From the export volume, textile and garment exports will probably increase by about 10% this year, but the increase in exports will mask the fact that the volume of exports is flat or even down."

Wang Qianjin said.

The above-mentioned textile industry in Guangdong said that at present, the stock of cotton on hand is about 30 thousand tons. The high cost has caused the enterprises to suspend the purchase of goods. Before September, the new cotton market will be dominated by the consumption of existing stocks, and the possibility of limiting production is not ruled out.

In view of the recent market rumors that textile and garment export tax rebates may be substantially reduced, Wang warned that it is not the right time to adjust the tax rebates for textile and clothing. If the tax rebate has been substantially reduced, the textile and garment export volume will also increase negatively this year.

The rumors that the import cotton tariff further downgrades even though the expected impact is also very limited. The foregoing textile enterprises said that the current price of the US cotton to plant has been about 8000 yuan more than the domestic cotton to plant price per ton, even if 1% of the tariff quotas were abolished, and about 4% of the quasi tax quotas were abolished, the price difference could be reduced by 300-400 yuan or so, with limited influence.