The Collapse Of The Largest Cotton Producing Country Has Become A Net Importing Country Of Cotton.

The largest cotton producing country is completely reduced.

On the one hand, China's demand for cotton has increased year by year. The data from Eastern agge show that the output of cotton has increased from 4417 kilotons to 7664 kilotons in 2000, and consumption has increased from 5023 kilotons to 11163 kilotons, and the gap between supply and demand has been increasing. In addition, the decline of cotton planting income has also become the fundamental reason restricting the further increase of cotton production. The data of the national development and Reform Commission show that the wheat and cotton planting benefit ratio of 2008 is 1:6.2, and the benefit of rice and cotton planting is 1:7.9 and 1:7.5 respectively than that of 1:5.62009.

The huge differences between supply and demand will naturally lead to a shortage of cotton.

What is even more worrying is that the US agriculture act 1933 established the cotton subsidy policy. In 2002, the agricultural bill further established export subsidies and restrictive subsidies, and also set up anti crisis subsidies for cotton farmers and sales subsidies for us cotton.

From 1999 to 2003, the US government subsidized cotton rate up to 89%, that is to say, the subsidy for producing 100 yuan cotton was 89 yuan; from 2001 to 2002, the rate of subsidy in the United States was over 129%.

China's subsidy to cotton is only 15 yuan per mu, which is a drop in the bucket compared with that in the United States.

"The emergence of cotton today is also a necessity to some extent."

"In the short term, the possibility of China's cotton fall is not too great, but in the long run, the cotton crisis is indeed great and there is a possibility of repeating the mistakes of soybeans," Ma Wenfeng, an analyst with the Oriental Agribusiness Consulting firm, said in an interview with business value.

Similar trajectories

Before talking about cotton, let's briefly review the trap of soybean.

In August 2003, the US Department of Agriculture announced that the soybean harvest was not good enough.

A large number of financial capital quickly entered the futures market. From August 2003 to May 2004, the price of soybeans reached 4300 yuan / ton, reaching the highest level in the 6 years of the Chicago futures exchange.

And at that moment, China bought 1 million 500 thousand tons of us soybeans at the highest price and did not hedge anything.

After only one month in the purchase, soybean prices fell to 3100 yuan / ton, and the purchasing enterprises were in a passive position in an instant.

This is undoubtedly a fatal blow to China's soybean processing enterprises. The total loss of Chinese enterprises involved in purchasing is more than 8 billion yuan. In the year after that, more than half of the small and medium-sized soybean processing enterprises stopped production and went bankrupt, and Shandong's enterprises relying on imported soybeans were almost completely annihilated, and the purchasing price of domestic soybeans dropped sharply.

Obviously, foreign capital will not miss this golden opportunity. Purchasing large quantities of soybean processing enterprises in China further strengthens the right to speak and decide in the soybean field.

Subsequent facts show that US soybean production recorded a record in 2003.

Obviously, this is an international grain trader and fund co operation "bureau", the result is that China's soybean industry is completely occupied.

The reason why the soybean fall is so clear is that today's cotton is repeating the trajectory of soybean fall yesterday.

After the cotton price rose from 17000 yuan / ton in May 2010 to two yuan in November 2010 and February 2011, Chinese textile enterprises encountered unprecedented difficulties.

According to the Ministry of industry and information technology, in the first 7 months of 2011, the overall profit margin of small and medium enterprises was less than 3%, and 60% to 70% of SMEs faced serious survival difficulties.

It can be seen that cotton, like soybeans, has also been plunged after soaring prices, causing a large number of processing enterprises to purchase raw materials or purchase raw materials with large amounts of capital, so that foreign capital quickly cut into processing links and pformed from traders to industrial holding companies, and then continued to invade China's cotton industry chain.

This is the case. In the upper reaches of cotton, seed industry, China has bought Monsanto cotton varieties. Although China has also developed hundreds of varieties, patents are still controlled by Monsanto, while in the middle reaches and downstream sectors, the international cotton merchants such as Louis Da fir, weir brothers and Jiachi have all landed in China's cotton market.

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It is worth noting that Louis Da Fu is one of the makers of the "tragedy" of soybean that year.

Why does cotton have such a similar development trajectory? In fact, a careful study of the agricultural products that China has fallen into or will soon fall into is very obvious.

Soybean has been trapped, corn is very dangerous, and cotton industry has been in urgent need. These agricultural products have very strong industrial processing characteristics, so that these agricultural products can find a good market demand. Secondly, these agricultural products also have the characteristics of very concentrated production, such as cotton. In 2009, North China cultivated area accounted for 42% of the total area, output accounted for nearly 35%, northwest inland planting area accounted for 28%, and output accounted for nearly 40%.

The concentration of production areas and production also provides very convenient conditions for the speculation of these farm products. Another point is that these agricultural products are not only able to industrialise a lot, but also are disguised as important food eaten by people. Naturally, soybeans and corn need not be mentioned more. For example, cotton flowers, in addition to the large demand of textile industry, the feed industry actually has strong demand for cotton seeds. This creates a competition for food between people and industry. Finally, it can not be overlooked that, for example, cotton has always insisted on grain production as the key link, and "grain and cotton competition" has always existed. The profit of planting cotton has always been lower than that of planting grain, resulting in a decline in the planting area of cotton.

It can be clearly seen that on the surface of cotton competition, the logic behind it lies in the fact that China's market participants are small in scale and weak in strength, and the domestic market is in a completely competitive market pattern. The oligopolistic market structure of the international market, the strength of oligopoly and the strong control power in the international agricultural product market, especially when the global macro-economic environment has changed dramatically, these enterprises help and even manipulate the market by means of high leverage financial instruments, such as futures and options, with the help of capital advantage and information superiority.

"Cotton and soybean are going through a very similar track and hype."

In an interview with commercial value, Liu Cheng, the China commercial productivity promotion center, said: "China cotton should try its best to avoid repeating the mistakes of the soybean tragedy."

Changing industry chain

In comparison, the cotton industry chain is relatively short, and the application scope is limited to the textile industry, medical and other industries.

But cotton related industries are very extensive.

In the upper reaches, cotton seed industry is full of business opportunities.

On the one hand, China's technology in genetically modified cotton is not backward. As early as 1993, pgenic cotton with independent intellectual property rights was developed in China. The planting area of pgenic cotton in China also increased from 3 million 800 thousand mu in 1998 to nearly 52 million 400 thousand acres in 2010.

But with the passage of time, the resistance of pgenic cotton decreased gradually, resulting in a decline in production. According to the statistics of China, the output of cotton in China was 7 million 620 thousand tons in 2007, reduced to 7 million 490 thousand tons in 2008, and further reduced to 6 million 400 thousand tons in 2009. From the cotton planting area, the cotton planting area in the next 2007~2009 years was 88 million 891 thousand and 500 mu, 86 million 311 thousand and 500 mu and 74 million 250 thousand mu in succession.

The new generation of pgenic cotton seeds has become the commanding height of commercial investment and development.

On the other hand, some good quality but low yield cotton, such as colored cotton and long staple cotton, will be the new force in the cotton field.

In fact, the biggest change and the fastest change should belong to the downstream cotton processing industry, mainly referring to the textile industry.

When a relatively high price of raw materials, new alternatives will continue to appear.

This is the case for the textile industry.

It can be seen that cotton substitutes are constantly emerging.

For example, PTA, PTA downstream extension products are mainly polyester fibers, commonly known as polyester.

Polyester is the main raw material of the textile industry. Cotton yarn generally accounts for 60% of the textile materials, and polyester accounts for 30 to 35%. However, the consumption of the two is replaced by price changes.

The data show that the ratio of cotton distribution in May 2011 has dropped significantly from 81.5% to 73.1%. This change is astonishing, indicating that the substitution of chemical fiber and other textile materials to cotton increased.

This brings infinite business opportunities to the new material industry.

It not only brings business opportunities to the new material industry, but also brings great opportunities for many new industries.

In particular, new industries such as bamboo charcoal fiber and hemp industry have become a new investment direction because of their many advantages such as health care, environmental protection and functionality.

In 2009, China has become the world's second largest health care functional textile consumer market after the US, with a total sales volume of US $13 billion 400 million, second only to the US $14 billion 700 million, and is growing at an annual rate of 20%.

Not only that, health function textiles, as part of the health care products which are juxtaposed with health food, have exceeded the market sales of health food, and the market scale of health care functional textiles in 2015 will reach 200 billion yuan.

In fact, Japan's health care functional textiles have accounted for 39% of all textiles, while the United States is 28%, while China's proportion is still very small, and the market prospect is very broad.

In fact, there is another very important business opportunity in the lower reaches, which lies in the recycling of garments.

At present, 22.1% of Japanese clothing and other fiber products have been recycled, but this is still far below the steel industry's product recovery rate of 88.5%, and the recovery rate of aluminum products is higher, reaching 93.4%.

While China has made some achievements in the recycling of garments and textile regenerated fibers, the production capacity of regenerated fiber has reached 7 million tons and its output has reached 4 million tons.

A major good news is the 12th Five-Year plan for China's textile industry. In the next 5 years, China will initially set up a textile recycling fiber recycling system.

By 2015, the total fiber processing capacity is expected to reach 51 million 500 thousand tons, of which about 15% is recycled fiber.

This will also become a new highlight of recycling industry after garbage disposal.