Cotton Prices Are Rising And Falling.

The "magic weapon" commonly used by the government to stabilize the market is the system of purchasing, storing, throwing and storing.

After a recent roller coaster ride, cotton spot prices continued to slump in the near future.

With the arrival time of the scheduled cotton temporary storage and purchase plan, the domestic

In August 31st, China measured domestic spot prices.

Du Min, director of the Rural Development Department of the rural economic research center of the Ministry of agriculture and director of the National Economic Research Office of the national cotton industry technology system, introduced the purpose of introducing the plan for temporary storage and storage of cotton. First, we must stabilize cotton production, and two, we must ensure farmers' income to ensure domestic supply.

The implementation of the minimum purchasing and storage price method, at the same time, the price is not quantitative, which means "open purchase" when the market price is low. This can ensure the interests of cotton farmers and is conducive to the regulation of cotton prices.

From a practical point of view, when the market price is low, it can play a certain role by controlling the market price and stabilizing the market price. However, when the price is high, the effect of lowering prices by throwing and storing is not ideal, and the latter's influence on the groups of farmers and industrial chain can not be ignored.

Policy objectives and reality

Yes

In the normal years when prices did not fluctuate too much, cotton storage and storage were mainly carried out.

Since the financial crisis, due to price fluctuations, cotton purchasing and storage, throwing and storage efforts have increased significantly.

During the cotton harvest in 2008, the global financial crisis spread to the real economy, and China's textile and clothing exports declined, resulting in a sluggish domestic cotton market and low prices.

China has issued three cotton purchase and storage policies for 220 thousand times, 1 million tons and 1 million 500 thousand tons respectively. The total number of storage and collection has reached 36% of the domestic cotton production in that year, and the share of domestic consumption has also exceeded 20%.

In 2010, when domestic cotton prices accelerated, in August and October, China reserves cotton management company, which was responsible for reserve management, threw two stores up to 1 million tons.

However, cotton prices have plummeted since then.

In the cotton price ups and downs, in order to stabilize cotton production, operators and cotton enterprises expected to ensure market supply, in March 2011, the national development and Reform Commission issued the "2011 cotton temporary storage and purchase plan", decided in Xinjiang, Hubei, Shandong and other 13 provinces (autonomous regions and municipalities) cotton main production area temporary storage, execution time is from September 1, 2011 to March 31, 2012, the temporary storage price is standard grade lint to the warehouse price 19800 yuan per ton.

During this period, the price of the monitored cotton market is lower than this price for five consecutive working days.

Du Min introduced that, compared with the temporary purchase and storage in 2008 after the acquisition began, and the number of restrictions, this year's temporary storage and purchase before the season sowing, has enough time to pmit to farmers and cotton operators, so the effect will be more obvious.

According to the calculation of the reasonable cost of the processing and circulating enterprises, the purchase price of the farmers from the farmer's hands is between 4.5 yuan per catty and 4.3 yuan -5 yuan, which is much higher than the temporary purchase and storage price in 2008, which is conducive to stabilizing the production of cotton. Du Min thinks that the purchase price is reasonable.

In August 31st, the China Cotton Association announced that the latest cotton situation month reported that according to the actual investigation, it is estimated that the total area of cotton planting in the whole country will be 80 million 180 thousand mu in 2011, compared with that of the previous year, an increase of 4.1% over the previous year.

Since the sowing of cotton, the meteorological conditions in the cotton area are suitable, and the occurrence of pests and diseases is relatively light. The total output is expected to reach 7 million 480 thousand tons, an increase of more than 25% over the 5 million 960 thousand tons in 2010.

Unlike previous purchases, there is no quantitative restriction in the plan.

Xie Chao, who has been engaged in cotton business in Xinjiang for a long time, said that in the short term, the purchase and storage not only had the role of supporting the market for China's cotton prices, but also for international cotton prices.

However, the impact of purchasing and storage on future prices remains to be seen. If spot prices remain low, as in 2008, long-term storage and storage capacity will inevitably affect the latter.

He also said that the trend of cotton prices depends on the situation of downstream textile enterprises.

As many textiles are in the process of rising, buying cotton, digesting this part of raw materials, and reducing the profits of enterprises.

If the situation of textile enterprises can not be improved, the price of cotton will hardly rise substantially.

{page_break}

According to the current cotton prices and the rules of storage and purchase plan, it is expected that the purchase and storage will start in September 8th.

Under the current low price, temporary purchase and storage can achieve the goal of underpinning.

However, at present, cotton processing enterprises and cotton farmers are at a stalemate. Cotton growers are expected to be relatively high, processing enterprises are more cautious in purchasing, and new cotton is less.

It is expected that with the new cotton market going on a large scale, the short-term supply will be larger in October, and the price will decrease.

If the annual reserves are around 1 million tons, the market can basically maintain a balance, but it does not rule out panic or overoptimism in the market.

Cotton prices can not be expected to be too high, and it is expected to fluctuate around 20 thousand yuan / ton.

It is easy to stabilize the market.

The rise of cotton prices will certainly increase the income of cotton growers to a certain extent. But from the perspective of the whole industrial chain of cotton producers, operators and cotton enterprises, it is more desirable that prices will be relatively stable and predictable.

Wan Bingzheng, vice general manager of import and export branch of Shandong Yantai Home Textiles Co., Ltd. told Xinhua that the export of the company in the first half of this year was basically the same as last year, but exports began to decline sharply in July.

An important reason is that when the order was signed for delivery in the second half of the year, domestic cotton prices fluctuated drastically. Some customers shifted their orders to India and Pakistan, where prices were relatively stable at that time, resulting in an 50%-60% decline in orders and no big orders in the second half of the year.

On the other hand, relative to the low price of the market, the role of the reserve market is not obvious when the price is high.

Theoretically, dumping and storage will play a certain role in stabilizing market prices, but the magnitude of their effects is related to the proportion of reserves in the total consumption of the country.

From August 2010 to October, the Central Cotton store supplied two tons of 1 million tons of dumping and storage, but after leaving it, there was only 2.3 million tons of inventory left, which was less than one month's consumption in the domestic market. The market had already expected this, and then the price fluctuated considerably.

After the first sale of 600 thousand tonnes of State Cotton in August 10, 2010, spot prices dropped slightly. At the end of September, when the second time of selling 400 thousand tons was announced, spot prices rose all the way. Until the 16 measures adopted by the State Council to stabilize prices in early November, there was a slight pullback.

Not only cotton, but also pork that has recently promoted CPI.

According to the 2006 pork consumption per capita consumption of 39 kilograms calculated by the China Meat Association, the annual total consumption of pork will exceed 50 million tons. According to the Ministry of Commerce, the central reserve of frozen pork is 200 thousand tons, compared with consumption.

Du Min also admits that the regulation of reserves is indeed easy to stabilize.

But at the same time, she also said that despite the assumption that the consumption inventory ratio should be used as a cotton safety line, it is a difficult problem to measure the adequacy of reserves.

In China's production of textile products, 30%-40% is used for export. It is worth exploring whether the demand for this part of cotton should be taken into account.

"At present, the Ministry of agriculture's production strategy is to ensure that 1 billion 300 million people in the country are wearing cotton and the cotton demand from exports can be settled with imported cotton."

Du Min said.

The rise in cotton prices at the end of last year and early this year is not caused by changes in supply and demand brought about by the reduction of cotton production.

The international cotton price is the first time since China's accession to the WTO, and the capital speculation caused by the abundant liquidity of the world is affecting cotton prices. Therefore, the role of "throwing and storing" is not obvious.

The rising cost of production has also made the government be in a dilemma for storing and suppressing prices.

Cui Xiaoli, a researcher at the Ministry of rural development of the State Council Development Research Center, said that the production cost of grain and cottonseed oil has been rising sharply in recent years due to the increase in agricultural means of production and labor costs.

{page_break}

In fact, in recent years, the behavior of Chinese farmers has changed. Due to the increase in income from working in cities, farmers no longer rely on the sale of agricultural products to pay for their daily expenses. When prices are not satisfied, they often have a reluctant sale, which will have an impact on regulation and control.

In recent two years, the minimum purchase price is difficult to start in the process of grain purchasing and storage.

"In a dilemma, the government should be inclined to protect the interests of farmers."

Cui Xiaoli believes that in order to fundamentally solve this problem, cotton and cotton textile enterprises should be pferred to Xinjiang for cotton growth. Meanwhile, cotton spinning enterprises should be encouraged to pfer to Xinjiang. In terms of grain, it is necessary to rely on the reform of land system in other areas to achieve large-scale planting to ensure supply, which requires "top-level design of the country".