Cotton Prices Continue To Rise &Nbsp; Demand Is Relatively Pessimistic.

In February 2012, after the Spring Festival, the domestic cotton market continued to rise slightly before the holiday, and the prices of downstream yarn and cloth also rose significantly.

The policy of purchasing and storage has established strong support for domestic cotton prices, and indirectly led to the relatively high operation of international cotton prices. Before the end of the purchase and storage policy, domestic cotton prices are expected to remain stable and strong.

The continuity of the purchase and storage policy will protect the cotton planting intention in the next year, and help to alleviate the fluctuation of cotton supply in the next year. After the end of the purchase and storage policy, there will be downward pressure on cotton prices when the supply is still relatively adequate and the downstream demand is weak.

Market review --

Foreign cotton prices fell slightly

Domestic and foreign spreads continue to widen

Since late January,

In the domestic market, the domestic market bullish sentiment has been enhanced by the purchase and storage policy, and domestic cotton prices have continued to rise after the Spring Festival.

Since mid January, China's cotton composite price index and the national grain purchase price index have risen slightly.

As of February 13, 2012, China's cotton composite price index was 149.77, up 1.6% from the previous month, and the national grain purchase price index was 138.4, up 0.75% from the previous month.

China's cotton composite price index is 11.37 percentage points higher than the grain purchase price index, an increase of 1.36 percentage points from the previous month.

In January 2012, China's cotton imports fell.

According to statistics from the General Administration of customs, China imported 326 thousand tons of cotton in January, a decrease of 464 thousand tons from the previous month, a decrease of 58.7%, a decrease of 65 thousand tons and a decrease of 16.6% compared with the same period last year. In September 2011 ~2012, China imported 2 million tons of cotton, an increase of 724 thousand tons, an increase of 56.7% over the same period last year.

Market analysis --

Increase in cotton inventories

Consumption continues to decrease

In January 2012,

Since 2011, due to the lack of export and consumption demand and tight monetary policy and other factors, domestic enterprises have tightened funds, production has slowed down, the real estate market has cooled down, and economic growth has gradually dropped.

In the China economic outlook, IMF expects China's growth rate to be 8.25% this year, down 1 percentage points from the previous year, down 0.8 percentage points from last September's forecast.

Adequate supply of global cotton

There is a serious shortage of rainfall in California, and the spring sowing is facing challenges.

According to foreign reports, the amount of irrigation water needed for spring sowing in central California is insufficient. The cumulative precipitation in San jonking area from October 2011 to January 2012 is only 254 millimeters, less than half of the normal level in the same period in previous years. The total rainfall in this year is less than 1/3 in the same period of last year.

The whole of California is likely to be in a state of prolonged water shortage.

Affected by the lack of rainfall this January, more than 80% of the state is in drought.

Judging from the current situation, the snowmelt will be the least in recent years. Cotton planting in the core cotton producing areas of California is facing a threat.

India's output forecast is down.

According to the latest forecast of India Cotton Advisory Committee (CAB), cotton production in India this year was 5 million 865 thousand tons, down 187 thousand tons compared with the forecast, because cotton yield per unit area decreased and new cotton listing continued to be lower than the same period last year.

However, the volume of cotton exports this year has increased to 1 million 428 thousand tons, an increase of 68 thousand tons compared with the previous forecast, due to the increase in China's import demand.

As of the end of January this year, India has shipped 748 thousand tons of cotton exports.

Pakistan's new cotton market is much higher than expected.

According to foreign reports, in the second half of 1 this year, the new cotton market in Pakistan was 133 thousand tons, more than doubled compared to the same period last year.

By the end of January, the total number of new cotton listed in Pakistan has reached 2 million 312 thousand tons this year, an increase of 22.6% over the same period, which far exceeded the forecast.

Australia's flood has receded and cotton is unharmed.

According to foreign news reports, with the retreat of rainstorms and floods, Australia's cotton producing areas have recovered calmly, and the damage to cotton fields is far lower than expected.

According to local authoritative analysis organizations, Australian dry land cotton fields benefit from recent rainstorms and grow even better than in previous years. Only 5% of the irrigated fields enter the mature period when the rainstorm is approaching. Therefore, rainfall has little effect on the yield and quality of Australia cotton, and the final output will still exceed 1 million 130 thousand tons, much higher than last year's 900 thousand tons and a record high.

Brazil's cotton exports soars in January.

Brazil's cotton exports increased by 173.8% in 2012 to 52 thousand and 700 tons in January, a substantial increase over the seventh month period.

Although the peak period of cotton exports in Brazil has passed after October last year, the volume of exports in January is still the highest level in the same period.

Domestic cotton

By the end of December 2011, the average grade of cotton for public inspection in this year was 3.09, of which 2 accounted for 22.82% of the total public inspection of the country, 18.21 percentage points higher than that of the previous year; 3 level accounted for 47.82%, an increase of 16 percentage points over the previous year; 1~4 grade 96.73%, an increase of 19 percentage points over the previous year; 2 grade of Xinjiang public inspection cotton accounted for 31.47%, an increase of 2 points over the previous year;

Based on the above data, it is estimated that the 1~4 grade cotton in the current year is about 4 million 500 thousand tons.

Global demand is in the doldrums.

India yarn production revived.

According to the latest forecast of India Cotton Advisory Committee (CAB), because of the increase in yarn import demand in China, Sri Lanka, Bangladesh, Vietnam and Egypt, the domestic cotton consumption in India increased from 3 million 570 thousand tons to 3 million 670 thousand tons this year.

In December 2011, the number of registered yarn exports in India was 83 thousand tons, an increase of 8%.

The export of Pakistan's cotton yarn is expected to maintain a strong growth momentum in 2012 due to increased demand from abroad and declining production of India yarn.

Pakistan's exports of yarn and clothing were greatly reduced in December last year.

According to foreign reports, Pakistan's yarn and clothing exports declined sharply in December last year under the pressure of rising costs, tight energy supply and weak foreign demand.

In that month, Pakistan's yarn exports decreased by 22.9% compared to the same period last year.

The price of yarn exports dropped sharply with cotton prices, but the average export price of the whole year was still much higher than that of the previous year. In 2011, the average price of Pakistan's yarn exports increased by 28.6% over the same period last year, while the volume of exports decreased by 15% compared with that of the previous year, only 457 thousand tons.

In that month, the export volume of clothing in Pakistan was 10 million 300 thousand dozen, down 31.8% from the same period last year, and the export volume of knitted and woven garments decreased by 37.6% and 6.7% respectively.

Vietnam's cotton imports have been greatly reduced.

Because of the great slide in textile exports and the cost of imported cotton yarn below the purchasing price of cotton, Vietnam's cotton imports dropped sharply.

Vietnam imported 18 thousand tons of cotton in January this year, down 51.4% from the same period last year, and dropped two figures for eighth consecutive months, according to the Statistics Bureau of Vietnam.

If the price of imported yarn continues to be lower than that of cotton, the import of cotton will probably continue to decrease in the late period.

Domestic demand is hard to recover now.

Under the global economic situation, textile downstream demand can hardly be fundamentally improved.

After the Spring Festival, the price of cotton yarn and cotton cloth rebounded significantly in China. But according to the China cotton net survey, 72% of enterprises thought that the reason for the increase in yarn and cloth prices was driven by the increase of raw material prices, while 52% of the enterprises took a slight look at the first quarter orders.

Rising prices inhibit consumption.

In 2011, driven by a series of factors, such as raw materials, labor and energy prices, the price of terminal textiles and clothing increased significantly, which had a certain inhibitory effect on consumption and exports.

Since 2011, domestic clothing CPI has risen almost linearly, while the consumption of textiles and clothing has not accelerated.

According to the National Bureau of statistics, clothing consumption in 2011 increased by 2.1% year-on-year, compared with 1% in 2010. In 2011, the total retail sales of clothing shoes and hats and needle textiles increased by 24.2% over the same period last year, 0.6 percentage points lower than that in 2010.

On the export side, under the competition of many exporting countries, the demand for textile price increases is more obvious.

According to the US Department of Commerce, imports of textiles and clothing increased by 9.25% in the month of 2011 1~11, while imports fell by 2.14% over the same period last year.

Among them, imports from China increased by 6.2% compared to the same period last year, and imports fell by 2.47% over the same period last year.

Over the same period, imports from Vietnam, India and Indonesia increased by 14.82%, 10.64% and 14.43%, respectively, and imports increased by 9.85%, 1.84% and 1.29% respectively over the same period.

According to China Customs data, in 2011 1~12, China's textile and clothing exports increased by 20.1% over the same period last year, 4.5 percentage points lower than the same period last year. In December 2011, China's textile and clothing exports increased to 10% below the same period, and cotton textile and garment exports increased by less than 3% over the same period last year, down 13.2 percentage points from the same period last year, and the downward trend is obvious.

The rising cost trend is hard to reverse.

The trend of the rising cost of textile industry in China is still continuing, especially the trend of rising labor cost is difficult to reverse. The continuous improvement of wage level has gradually changed the previous situation of low labor cost.

According to the National Bureau of statistics, the per capita wage income of rural residents increased by 21.9% over the same period of 2011 as the wages of migrant workers increased.

Wage income accounted for 42.5% of the net income of rural residents, an increase of 1.4 percentage points over the same period last year.

The per capita wage income of urban residents increased by 12.4%.

The problem of "hard employment" is still more serious. According to the survey of China's cotton net, 85% of textile enterprises reflect the tense employment after the Spring Festival.

Under the support of State purchasing and storage policy, China's cotton market has a reliable guarantee for stable operation, but at the same time, the domestic cotton price is higher than the foreign cotton price, so that the downstream cotton industry in China undertakes a much higher raw material cost than foreign counterparts, and raises a series of product prices such as yarn, cloth, clothing and other industrial chains.

Many enterprises have begun to find another way out. Some enterprises are actively seeking to invest in factories abroad, such as Vietnam, so as to reduce labor costs and raw material costs, while others increase the import of raw materials and intermediate products to hedge domestic costs.

Forecast for future market

Lose policy support

Downward pressure appearance

The purchase and storage policy will be concluded by the end of March this year, and the domestic cotton price will be running near the temporary storage price. The regulation effect is more obvious.

The price of temporary storage and purchase in the next year is higher than this year. It can be said that the operation level of cotton prices in the early part of next year has also been guaranteed.

The cotton market is crucial during the period from March to the end of next year.

From the perspective of supply and demand, as of February 14th, the storage capacity has reached 2 million 544 thousand tons this year, exceeding the 1/3 of domestic cotton output this year. In the last month of the policy of purchasing and storing, in order to avoid the risk of operation after the end of the policy, many enterprises are expected to take the attitude of "bag for safety" and actively pay for storage.

Therefore, this year's domestic reserves are expected to reach 3 million tons. In the absence of the government's policy of dumping and storage and relatively stable market demand, it will trigger the prospect of tight market supply in the future.

However, according to the current data, in this case, the cotton market in the future can still achieve relative balance.

According to the purchase and sale data of the national cotton market monitoring system, if the storage capacity reaches 3 million tons, the total supply of cotton and the quota of imported cotton will be about 4 million 760 thousand tons in the latter part of this year. According to the current cotton level of textile enterprises, the demand in the latter stage will be roughly 4 million 680 thousand tons, and the supply and demand will be basically balanced.

According to the above data, if the reserves are significantly more than 3 million tons, the market supply will be slightly tighter if the cotton consumption is maintained at present level.

However, there is no shortage of cotton both at home and abroad.

According to the forecast of ICAC production and storage, in 2011/2012, the world's cotton production is more than 5 million 170 thousand tons except China.

After the end of the purchase and storage policy, the reserve cotton stocks are abundant, and the state has strong market regulation and control capability.

In addition, the cotton market still has great potential pressure. After the end of this year's purchase and storage policy, the cotton price will lose its policy support and the downward pressure will gradually appear.

First of all, compared with the national cotton, imported cotton has a strong competitiveness in terms of price. At present, the price of imported cotton under Grade 3 cotton and sliding duty duty is less than 2400 yuan / ton.

Second, the demand for cotton in the textile industry is weak and there is room for further compression.

If cotton supply is tight or cotton prices rise, textile enterprises have more ways to compress cotton consumption, such as increasing imports of intermediate products (cotton yarn, cotton cloth) and even the final products; increasing the amount of substitute products such as polyester staple fiber, the current difference between the 3 grade cotton and polyester staple is about 7300 yuan / ton, and the use of alternative materials has strong attraction for enterprises; some enterprises can seek to pfer to Southeast Asia and other low cost areas.

Third, the cotton output and quality in this year have increased significantly compared with the previous year. For example, the data of the previous statistics show that only 2 million metric tons of medium and high grade cotton have been checked for public inspection.

In February, the national cotton market monitoring system made the following adjustments to production and storage data: reducing domestic cotton consumption in 2011 to 8 million 696 thousand tons, reducing 180 thousand tons; import volume increased to 4 million 219 thousand tons, increasing 24 thousand tons.

After adjustment, the domestic cotton end stocks increased 207 thousand tons to 5 million 280 thousand tons in the current year, and the final inventory consumption ratio was 60.6%, up 3.6 percentage points from the previous month.

In the 2012 year, the stocks in the early period increased by 207 thousand tons to 5 million 280 thousand tons, and the import volume was reduced by 81 thousand tons to 2 million 917 thousand tons, and the consumption volume was reduced 110 thousand tons to 8 million 924 thousand tons.

After adjustment, the stock will be increased from 236 thousand tons to 5 million 895 thousand tons at the end of next year, and the final inventory consumption ratio will be 65.96%, up 3.4 percentage points from last month.