Cotton Growing Is Limited, Whether High Prices Continue To Be Solved.

Since 2011, domestic cotton spot has been rising first and then dropping, especially since April. Cotton price Continued decline, the price of no market, the sharp decline in popularity, textile enterprises wait-and-see sentiment is strong. According to China's first textile network in September 1, 2009 as the starting point of the current super bull market, as of April 8th this year, in a year and a half: Zheng cotton contract price from the beginning of the year 13280 yuan / ton rose to 29060 yuan / ton rose 15780 yuan / ton, or 118.83%, during which Zheng cotton up to 34000 yuan. The price of spot 3 cotton rose from 12977 yuan / ton to about 29592 yuan / ton, up 16615 yuan per ton, and up to 128.03%. The peak value reached 31500 yuan / ton.

Cotton growing area was limited in 2011.

The deputy director of the Rural Development Department of the national development and Reform Commission recently published a conference on the 2011 green paper on rural economy. Behind the current grain yield increase, new changes occurred in cash crops, and cotton production continued to decline. Although the price of cotton was the highest in November last year, the cotton situation is still not good this year.

Long Xi, deputy director of the Ministry of agriculture of China's Ministry of agriculture, recently revealed that the intention of planting cotton in February increased by 5.4% over the end of last year, mainly due to the rise in grain purchasing prices, resulting in a rise in wages and a relatively low cotton price. Long Xi said that the Ministry of agriculture is actively applying for production support policies to enhance the enthusiasm of cotton farmers.

The China Cotton Association March monthly report reduced the intention of planting cotton in 2011. The survey shows that the cotton growing area in most parts of the country has increased, due to the high level of cotton purchase price, but the growth rate is limited by labor, 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%.

Whether high cotton prices are sustainable or not?

Xu Wenying, vice president of China Textile Industry Association and honorary president of China Cotton Textile Industry Association, at the end of March at the China Cotton Spinning Association Conference held that the cotton output in recent years has been decreasing year by year, and the decline in cotton production and the increase of cotton yarn production have made the contradiction between supply and demand bigger and bigger. Under the situation of raw material prices, workers' wages and cotton growing costs, domestic and foreign cotton prices will remain high for a long time, and the era of low cotton prices has passed.

Yang Shibin, President of China knitwear industry association, believes that whether cotton prices can continue at a high level depends on whether the downstream conduction mechanism is smooth.

Yang Zhaohua, President of China Textile Industry Association, thinks that the trend of cotton prices should be judged from the perspective of upstream and downstream industry chain, and ultimately depends on whether consumers can bear the rise of textile prices. He reminded enterprises to pay close attention to the consumption situation in the two quarter of this year. If consumers can not afford high cotton prices, then cotton spinning enterprises may be a severe challenge.

Wang Qianjin, chief analyst of China's first textile network, said that although the price of cotton has been substantially adjusted, it means the end of the bull market. The external environment of the cotton market and its own supply and demand situation (rigid demand + excess capital + high inflation) have determined that the current cotton price rise has a relatively solid support. After excluding the bubble brought about by the speculation of the hot money, the cotton price above 25 thousand yuan is still the embodiment of the normal supply and demand relationship and the rigid cost increase in the market. Wang Qian made a preliminary judgement. Low cotton price Era Gone forever, the advent of the "high cotton price era" has been irreversible.

Increased pressure on survival under high cotton prices

Most of the textile companies listed in the annual reports have been published in the annual reports. Raw material price Rising costs cause pressure on the company and affect the operation of the company. Among them, Lu Tai A (000726) said that the increase in the price of products driven by the price of raw materials is lagging behind, which has a certain impact on the improvement of the gross margin of the company's products.

It is understood that the stock end of Huamao stock in 2010 increased by 82.3% over the beginning of the year. The main reasons were: first, the domestic cotton production decreased in 2010, and the price rose sharply, making the cost of raw cotton increased. Two, the company also increased the stock of raw cotton in order to ensure the normal operation of the company. Huamao shares (000850) also said that the domestic cotton production and cotton resources were tight. In order to ensure the normal operation of production, the purchase amount of raw cotton was increased during the current period. Meanwhile, the price of raw cotton rose sharply and the volume of money increased to make the loan of liquid capital increase correspondingly. The annual report shows that in 2010, the company's short-term borrowing rose by 43.03% over the beginning of the year.

Generally speaking, the price of textile products in the lower reaches of the country is difficult to raise, and the price of products can not keep up with the pace of rising prices of raw materials. Textile enterprises with relatively small scale are still unable to start production normally. From the whole year's situation, the foundation of the international economic recovery is not strong enough. The export situation of our textile and clothing is still grim, and the textile enterprises have limited affordability to the price.

Wang pointed out that from the basic aspect of cotton itself, the relatively relaxed supply phase, and the poor sales of downstream products in this year's business, encountered the capital chain dilemma, and became the most fundamental factor that restricts the current cotton market. In fact, starting from mid February this year, the sluggish spot market and poor sales of real estate cotton have constituted a resistance to market growth. In the next place, with the electronic matching cotton and Zhengzhou Cotton falling below the 30 thousand pass, new confidence is placed on spot merchants' hoarding confidence, and the differentiation of hoarding cotton enterprises is starting to take place. In mid March, Shandong Wei bridge, which is known as a market vane, lowered its purchase price of 3 grade lint 1500 yuan to 28500 yuan / ton, and the quotation of Xinjiang cotton, which was very strong in the spot market, began to loose, and triggered a new round of cotton price downward.

Wang predicts that the adjustment does not mean the end of the bull market in the cotton market. The long-term trend of cotton prices is still rising. Only after the effect of the adverse factors has not subsided, there may be some room for a decline in cotton prices in the near future.