Skyrocketing And Plummeting, The Root Of The Roller Coaster Of Cotton Price Is Planed.

Within six months

The ghost of the boom and fall is again hovering over the agricultural products.

This time, cotton was affected.

In the past 3 months, cotton prices have changed again: unlike last year, this is a "diving".

Since last year, the price of "crazy cotton" has been rising and falling, like waves billowing and covering one wave.

According to the first textile net, cotton futures prices rose from 19610 to 32610 in the two months from early September 2010 to early November, or up to 40%.

After November 2010, cotton prices began to slide down to a minimum of 25205.

Subsequently, cotton began to rise for a period of three months, and in March this year, it broke through the historical mark of 34 thousand yuan / ton.

The world is unpredictable.

The cotton price, which has not yet gained a firm foothold, has followed a startling drop.

Since the beginning of April, domestic cotton prices have fallen by an average of 500 yuan / ton per three days, and have fallen back to 24 thousand yuan / ton in nearly two months, falling nearly 30%.

The collapse of cotton prices has caused many farmers to lose their desire to reduce production or not.

"Now cotton price is only 8 yuan per kilogram, and I haven't sold it yet, and last year when it was high, it came to 14 yuan per kilogram, even if it was 12 yuan per kilogram 3 months ago."

Looking at nearly 3500 kilograms of cotton stored in the house, Wang Jinshun, a villager in the twenty Mile Village of Gaotang County, Shandong, regrets.

In the main cotton producing areas of Shandong, Dezhou, Liaocheng and other places, Wang Jinshun is only one of the many "injured" cotton farmers.

It is estimated that the cost per mu of cotton has now been close to 1300 yuan (400 yuan for manpower, 500 yuan for agricultural materials, 400 yuan for rent), and the average yield of cotton is 280 kg or so. The seed cotton price can only be guaranteed by 9.3 yuan per kilogram, reaching 11 yuan per kilogram.

The current cotton price is obviously not satisfactory to cotton growers.

According to Ma Junkai, Deputy Secretary General of the cotton association of Dezhou, nearly 40% of the farmers' households in many parts of Dezhou have not been sold, and some villages have about 80% cotton reserves. Even some farmers have not sold a catty.

The sharp fluctuations in cotton prices have led to the embarrassing situation in the cotton market today: the difficulty of cotton yarn sales in textile enterprises, the reluctance to purchase lint, and the limited production or stop production of some enterprises. The cotton processing and purchasing enterprises are afraid that cotton prices will continue to fall and they will not buy cotton. All cotton farmers who have cotton reserves are unwilling to sell cotton at present prices, and many people want to wait for a "suitable price".

In this industry chain, cotton farmers, cotton enterprises and textile enterprises are all "entangled".

Why do cotton farmers choose to store goods?

What information do they judge cotton prices?

Who made cotton farmers miss the best time to ship?

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Cotton farmers understand the channel of information is very simple: from the first textile network to see the purchase price of the ginning factory.

At the bottom of the industrial chain, they are often speculators and victims in this speculative game.

Futures reflect the future price of commodities.

The 1109 cotton contract signed in September of this year has decreased by 2475 yuan / ton from the beginning of April to the end of the month.

The decline is still continuing, and this signal does not seem to bode well for cotton that expires in September.

In fact, the essential reason for any fluctuation in the capital market comes from the real economy.

In the real market, supply and demand are the two basic factors that affect the price fluctuation of the capital market.

However, in the process of exploring cotton prices, we found that supply and demand are only part of the whole circulation system in the agricultural products market.

According to the price of last year to determine the next season's production, this is called "cobweb theory" in economics.

In the "cobweb theory", the market mechanism is regulated spontaneously, and the price, production, demand and supply affect each other.

The agricultural product market is a typical "spider web type fluctuation".

Oversupply is the current situation of the cotton market.

On the contrary, new cotton came into season last November.

At that time, owing to the low temperature and rainy weather during the sowing period, the whole growth period of cotton was postponed last year, and the growth was not as good as in previous years. Cotton production was reduced, supply was tight, prices were higher and supply was less than needed.

Uncertain weather can easily lead to speculation in the market.

For cotton growers, they are at the bottom of the industrial chain. Because of information asymmetry and lack of financial resources, they are often speculators and victims in this speculative game.

The takeover procedure of cotton is the three basic step: cotton farmers pick cotton from the ground, cotton ginning plants gather cotton from cotton farmers and sell them to textile mills.

Cotton farmers understand the channel of information is very simple: through the first textile network to understand the purchase price of the cotton mill.

Once the purchase price of the cotton mill is raised, cotton farmers will have a "reluctant sale" mentality.

The spot market allows farmers to default. The cost of breach of contract is only some breach of contract.

Farmers see the daily rise in the purchase price, preferring to abandon the cost of liquidated damages in exchange for a higher purchase price in the future.

Large cotton mills in Shandong and other places raised cotton purchase prices almost every day in November last year, which made farmers more reluctant to sell, so there was a lot of hoarding and waiting for more favorable prices.

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The excessive intervention of off site speculation leads to a big deviation between futures price and spot price, which leads to misleading cotton purchase price and cotton growers.

As we mentioned before, cotton growers are reluctant to sell or hoarding judgment is based on the purchase price of the cotton mill.

Then, how did the price of the cotton gin plant come out?

The cotton ginning plant is located between the cotton farmers and the textile mills. They have more information channels than cotton farmers.

As an independent modern operation organization, the ginning factory must ensure its own interests in the process of operation.

In the course of the interview, futures analysts believe that the ginning factory is relatively sensitive to the trend of futures prices, and many ginning plants even employ a relatively professional futures practitioner to look at the plate and conduct risk operations.

When cotton price changes, the ginning factory can pass risks by hedging.

However, the cotton purchase price of cotton ginning plants is also mainly reflected by the supply and demand side of the market.

When supply is tight, farmers are reluctant to sell or choose to sell at a high price, and the price of the cotton mill increases.

At the moment, prices are agreed by cotton farmers and ginning factories.

Futures analysts believe that cotton futures prices do not directly affect the purchasing price of ginning plants.

"It's just a prediction, or a reference."

However, in the capital market, because of the existence of speculation, futures prices often deviate from spot prices.

In November last year, the cotton industry continued to record high, and the capital market and the spot market formed a linkage effect.

When the tight supply situation becomes a reality, price rise is inevitable. Investors who are short of cotton and cotton futures will immediately stop their losses, instead of doing more, with the support of the fundamentals, many investors will be echoed in the market, prices will rise, and cotton futures will continue to rise. Last September to December, it will rise for two straight months in a row.

Over the past two months, trading volume has exceeded the number of positions. There is no lack of speculative capital to intervene. This further pushes up the price of cotton.

Usually, a rapid rise is formed in a short time and has a basic support. This situation is most attractive to idle capital.

It is determined by the function of futures market value discovery, which means that if futures prices rise, the corresponding spot prices will also rise in the future.

Although futures prices can not directly affect the spot market, the fluctuation of price will magnify the fluctuation of prices in the real market.

Further, it has an impact on the trading mentality of buyers and sellers.

Back to the cotton circulation link, the cotton mill continuously raised the purchase price of cotton, and the phenomenon of farmers' reluctant sale was partly misled by the anticipation of futures price rise.

If cotton prices continue to be low, the cotton planting area will definitely continue to decrease next year, when cotton prices will rise and fall.

From a practical point of view, the root cause of "cotton cheap injury to farmers" is exactly the same as that of the previous "vegetable cheap injury to farmers", all of which lie in the "short-term speculation" of the whole cotton industry chain at the moment.

From cotton growers to middlemen to ginning plants and to cotton mills, they indulge in speculative pleasure.

Cotton, cotton and cotton producers hope that they can win a good variety, earn a good price, and even get huge profits.

In this game, cotton farmers are also the weakest parties to resist risk: the cotton planted today is priced after several months of listing. Once speculation fails, time and cost will all be wasted.

But what do cotton growers do not bet on cotton prices in the future according to season cotton prices?

How much time and cost can they spend to extensively investigate the market trend?

It is not a fair game to let cotton growers and brokers and investors who "specializes in research market" to break their wrists.

In fact, cotton farmers have been losing their income for 3 consecutive years since 2007.

If cotton prices continue to be low in the new year, the cotton planting area will definitely continue to decrease next year, and cotton prices will rise again and again.

Such a vicious circle, how to crack?

In March this year, the State Development and Reform Commission and other departments promulgated the "cotton temporary storage and purchase plan for 2011". It was proposed that the minimum purchase price of standard grade lint of 19 thousand and 800 yuan per ton in 13 provinces, including Xinjiang and Shandong, should be purchased from September 1, 2011 to March 31, 2012. This policy is considered by the industry to be the lowest protective price system of cotton.

"But the minimum protective price has a certain effect on stabilizing the market price, but at present, this price can not fully mobilize the enthusiasm of cotton farmers to grow cotton."

Tang Maoyong, deputy director of the textile and Fiber Inspection Institute in Liaocheng, Shandong, who often deals with cotton farmers and cotton enterprises, thinks that how to protect the interests of cotton farmers still needs to be explored.