Cotton Prices Are Hard To Meet In The Short Term

In 2011, domestic cotton prices showed a downward trend on the one hand. After exploring the 19800 yuan / tonnes of State purchasing and storage prices, the policy was narrowed at the bottom of the policy.

It is expected to collect and store duties and customs duties.

Supply and demand pattern continues to relax

2011/2012 cotton production is a foregone conclusion in the year of, and global output increased by more than 7% over the previous year.

The main cotton producing countries in the northern hemisphere have increased output in varying degrees except China, India and Pakistan because of 500 thousand tons of weather reduction.

Brazil and Australia in the southern hemisphere are also expected to increase production, but there is uncertainty in Brazil's output.

Consumption, USDA12 month data significantly cut down on global cotton consumption, especially China and India, the two largest consumer countries.

Due to the increase of production and the reduction of consumption, the inventory consumption ratio continued to rise in 2011/2012, and the stock at the end of the year increased significantly.

At the same time, as the initial inventory of 2012/2013, the beginning of the year will also suppress cotton prices.

Domestic cotton supply and demand is equally relaxed.

According to China

Domestic policy adjustment supply

According to the national cotton market monitoring system data, it is estimated that the number of temporary storage and storage will exceed 3 million tons this year.

The quantity of storage and purchase has a greater impact on the supply of cotton in the later stage. The larger the quantity of storage and storage, the more the pressure of future domestic spot supply can be reduced.

However, if the national reserve absorbs too much cash liquidity, it will easily cause price fluctuations if there are unstable factors.

As for the dumping of reserves, taking into account that the National Reserve has just been replenishment, it is not expected that the dumping and storage means will be used for regulation in the next year, and the overall supply and demand pattern also eliminates the worry that cotton prices will rise again.

From this point of view, the purchase and storage of cotton prices for the future will be more profitable.

In addition, the cost of imported cotton will increase in 2012 after the new sliding tax adjustment.

However, with regard to the situation of serious upside down of cotton prices at home and abroad, the new slide tax policy will be greatly reduced.

On the whole, the new sliding tax has limited benefits to domestic cotton prices, but it will still play a role in reducing domestic supply pressure before adjustment.

Economic weakness is a drag on consumption.

Global consumption is still in the doldrums due to continued European debt problems. Data released in USDA12 sharply cut global cotton consumption.

Domestic demand for the lower reaches of the market is weak. First, the production and sale rate of downstream products has dropped significantly, inventory has rebounded and the number of cotton cloth inventory has reached the highest level since 2008. Second, the internal and external prices have been seriously upside down, resulting in relatively low cost of external yarn, high domestic cotton yarn imports and hedging part of cotton consumption; third, the pattern of monthly average import and export volume of cotton cloth in China is larger than that of cotton yarn, and the monthly net export volume of domestic cotton cloth is lower than that of cotton yarn monthly average net imports.

To sum up, cotton supply and demand will remain loose in the future, and it will be more difficult to rapidly pick up the downstream consumption. The process of going to inventory will be slower.

But the two major policies of purchasing and storing and tariff have played a role in reducing the pressure of domestic supply, and indirectly provided a space for speculation in the late stage. It is expected that cotton prices will oscillate in a long period of time, with an interval of about 20000 - 25000 yuan / ton.