Cotton Price Roller Coaster &Nbsp; Regulatory Hand Looming.

China's cotton price suffered second rounds of avalanche.

In May 26th, a number of respondents pointed out that the austerity

However, there is also a view that the reduction of downstream demand and the suppression of policies with administrative control in the early stage are the key factors leading to the collapse of the current price.

It can be observed that Wei Qiao group, as a weathervane of the industry, has cut down the price of lint to the factory for eight times in two months, and the purchase price has been reduced by 5000 yuan since April.

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"The continuing weakening of downstream demand and the interaction of Wei Qiao's price adjustment have accelerated the collapse of China's cotton price."

Shandong cotton industry has just completed the survey, the introduction of Shandong Dezhou area 247

In May 26th, the China Cotton Association announced that more than 40 government departments, trade associations, cotton and textile companies met with the current situation in May 24th. They agreed that although the recent price declines have returned to rational factors, the huge fluctuations in cotton prices have damaged the interests of all parties in the industrial chain and are not conducive to the healthy development of the industry.

Downstream demand exceeds expected shrinkage

The increase in exports caused by the increase in product prices accounted for 80%, while the actual export volume increased by less than 5% over the same period.

In May 26th, China's cotton price index closed at 24479 yuan / ton, which fell 23 yuan / ton compared with the previous day, down 22% from the 31228 yuan / ton cotton price in March 10th.

The roller coaster prices were two times in the 2010-2011 cotton year.

Starting in September last year, China's cotton prices began to jump rapidly after a slow rise for a half year. The spot price of grade 328 cotton standard was more than 32 thousand yuan / ton in September last year, double the price at the beginning of the year, and in the last few weeks last November, spot prices fell by nearly 20%.

Aforementioned Shandong cotton industry said that the price of cotton prices rose sharply in two rounds. The market has decided that the imbalance between supply and demand of cotton is the most direct cause of soaring cotton prices. If the cotton yield is estimated at 6 million tons and the amount of cotton used for 10 million tons, the gap will be as high as 4 million tons.

However, "excessive rise" has seriously magnified the imbalance between supply and demand.

He said that the rise of 50% may reflect the imbalance between supply and demand, but the increase of more than 100% means that cotton prices already have bubbles.

Wang Qian, chief analyst of the first textile network, reminded the market that there has been a big error in estimating the supply and demand gap of cotton this year. "The actual gap is not as big as before."

From the early estimate of the annual output of 5 million 970 thousand tons of cotton to the estimated 6 million 600 thousand tons later, "the output of these two yields a whole month of cotton consumption in China".

Wang Qianjin said that according to the current cotton import situation, the number of cotton imports this year is about 270-280 tons, much smaller than the 3 million 500 thousand tons previously estimated.

Demand has also shrunk beyond market expectations.

A large scale cotton textile enterprise owner in Guangdong said that unlike last year's buyers who were queuing up to buy cotton yarn with cash, the cotton yarn was basically sold out after the Spring Festival this year.

In the hands of large and small cotton mills, piles of cotton yarn are hard to sell.

"Two evidence corroborate the fact that the downstream demand for cotton has shrunk."

Wang Qianjin said that in the first quarter of this year, China realized the 24% year-on-year increase in textile and clothing exports, but calculated that the increase in exports caused by the increase in product prices accounted for 80%. The actual export volume was less than 5% year-on-year, which was slower than the 15% growth in 2010.

Another evidence is that stocks of yarn and cloth as textile intermediate products have risen sharply.

Last September and October cotton prices were high. Cotton spinning enterprises had less than ten days' stock of yarn and cloth, and at present, most of the enterprises had stock for more than 20 days.

The cotton traders in Shandong said that most of the more than 200 cotton mills they had visited were two months old.

"On the whole textile chain, we simply can not afford such a large increase in cotton prices."

Shandong cotton industry said that after March, cotton prices continued to decline, forcing cotton prices to fall sharply.

Take the 32 yarn as an example, in the early March, the spot price of this yarn was 40 thousand yuan / ton, and now the price has dropped to 32 thousand and 500 yuan / ton.

Wei Qiao's 8 price adjustment

By controlling and supervising the key leading enterprises to control the cotton market, the government began to crack down on the price increase of agricultural products last year.

After the May 1, Wei Qiao group lowered the price of lint to the factory for three times in a week, of which the two cut was 500 yuan / ton, and the reduction was 1000 yuan / ton at a time.

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Such a tight price adjustment in a short time has caused the industry to shake.

The production capacity of Wei Qiao textile 7 million 200 thousand spindles ranks first in the global textile industry. Its annual cotton consumption is about 1 million tons, accounting for about 10% of the total cotton consumption in China.

As a weathervane of the industry, cotton purchasing processing factories in China decide their seed cotton purchasing price level according to Wei's daily cotton purchase, and downstream cotton textile enterprises also refer to Wei Qiao quotation to control the purchase cost of lint and strictly control the risk of operation.

Most of the three intensive price adjustments after May were attributed to Wei Qiao's own business behavior, and the judgement of the downstream demand and the future of the cotton market might reduce its bid.

However, in April, Wei Qiao also lowered its bid 5 times in a row.

"As a leading enterprise in the key monitoring of the government, the rise and fall of the price of Wei Qiao is often not only a simple corporate behavior, but also reflects the government's regulatory intentions at certain times."

The Shandong cotton industry explained.

Just before Wei Qiao lowered its offer, in March 10th, China's cotton price index reached 31228 yuan / ton, setting the highest point of cotton price rise after the year.

"Such a high position will inevitably lead to government regulation and control."

According to Xinjiang cotton industry, according to the policy of dumping and storage policy since last year, most market participants figured that the cotton price under 28 thousand yuan / ton is an acceptable policy range, and the risk of regulation is higher.

By controlling and supervising the key leading enterprises to control the cotton market, the government began to crack down on the price increase of agricultural products last year.

Wang said that for the cotton industry, the policies available to the government have already been exhausted. At present, there are few cotton reserves in the country's hands, and because of the high price of imported cotton, there is little significance in the increase in import volume. At present, the price of imported cotton is nearly 4000 yuan / ton more than the price of domestic cotton to factories.

Since the two quarter, with the price adjustment of Wei Qiao, the market has also welcomed the peak of a round of hoarding business.

Aforementioned Shandong cotton industry, the survey found that cotton processing enterprises in Shandong, Dezhou, 90% of the cotton has been released, a small number of cotton hoarding enterprises have been faced with large losses, he contacted a cotton trader hoarding 800 tons of cotton, the deal was a loss of 4 million yuan.