Deep Thoughts On Cotton Purchase And Storage System

Since the second half of last year, the price of cotton (19435, -115.00, -0.59%) in the international market has been down, and the system of cotton temporary storage has tied up the illusory "relatively high cotton price" in China. At present, the price of cotton is about 4500 yuan per ton at home and abroad.

On the one hand, the continuous increase of the price difference between domestic and foreign cotton has seriously weakened the international competitiveness of China's textile industry, and the domestic textile enterprises have used imported cotton in succession.

On the other hand, the downturn in the cotton market has also hurt cotton planting industry. This year, the national cotton planting area has decreased by nearly 10% compared with that in 2011.

In addition, it is subject to import.

Restrictions, domestic enterprises are in a dilemma: look at cheap imported cotton dry and anxious, expensive domestic cotton can not afford.

In the face of "heavy cotton", it is necessary to think deeply about the cotton purchase and storage system.

Upper reaches: cotton farmers' enthusiasm has been frustrated, planting area has decreased by nearly 10% this year.

Cotton in China

Closely related to the international economic situation, the price of domestic cotton market is also declining in the context of the euro zone's drag on the European debt crisis and the continuing recession.

Because cotton prices reached a high level last year, the enthusiasm of cotton growers is very high this year. However, this year's domestic cotton prices continue to go down unexpectedly. So the direct victims are cotton farmers. If they sell cotton according to the current market prices, it is difficult to recover the cost. Many cotton farmers store large quantities of cotton in the warehouse and face a great risk of loss.

The direct expression of cotton farmers' enthusiasm is the reduction of cotton planting area. Under the current cotton price declining environment, the reduction of cotton planting area is inevitable.

Cotton prices continued to fall in the first half of the year

"In the first half of the year, domestic cotton prices were falling. Cotton prices in the 5 and June fell by 6% after the end of the cotton purchase and storage in the previous year," Sun Liwu, an analyst with Zhuo Chuang's information cotton industry, said.

Until the end of June and the beginning of July, they were all down, and the increase was 8%.

However, in the first half of July, that is, the most recent period before July 6th, the market price slightly eased, and some areas even appeared a warmer trend.

The temporary storage and purchase of cotton in 2011 to 2012 ended in March 31st, and analysts said that because the price of cotton purchase and storage in the coming year was 20400 yuan per ton, plus the rise of cotton spot now, the supply and demand side would not be too obvious bad and positive, so it would be optimistic from the market mentality.

However, the continued decline in domestic cotton prices in the first half of this year is an indisputable fact.

According to the China cotton situation monthly released in May by the China Cotton Association, affected by the global and domestic economic slowdown, international commodity prices generally declined in May, and cotton prices fell faster and the spot prices fell to the lowest point of the year.

China's cotton price index (CCIndex328) fell below 19000 yuan / ton, and the total monthly decline fell more than 600 yuan / ton, averaging 19086 yuan / ton in May, down 1.5% compared to the same period, down 23.8% from the same period last year.

As of the end of June, China's cotton trade stocks still reached 1 million 730 thousand tons, while imports of cotton and cotton yarn continued to impact on the domestic cotton market. Due to the lack of market competitiveness, China's export orders continued to shrink.

As of July 10th, in the domestic cotton prices, Zheng cotton futures 10 day 1301 contract opened at 19440 yuan / ton, closed at 19500 yuan / ton, up 40 yuan / ton.

In addition, China's cotton price index of 18171 yuan / ton, up 95 yuan.

Cotton farmers become direct victims

This year cotton sowing is basically completed in China. According to the sampling survey of cotton farmers' sowing area, the cotton planting area in China is 72 million 820 thousand mu, which is 9.2% less than that in 2011.

It is not only the reduction of cotton planting area in China, but also a similar problem in the world.

In the 2012 report on crop acreage released by the US Department of agriculture in June 29th, it was mentioned that the total planting area of cotton was estimated at 12 million 600 thousand acres (76 million 490 thousand acres), 14% less than last year, and 600 thousand acres (3 million 640 thousand acres) lower than the end of March.

Among them, the area of upland cotton is 12 million 400 thousand acres (75 million 270 thousand acres), 14% lower than that in 2011, and the area of long staple cotton is 235 thousand acres (1 million 430 thousand mu), which is reduced by 24%.

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Ma Junkai, Secretary General of Dezhou Cotton Association, thinks that the low price of cotton and the low profit of planting cotton are the reasons for the low enthusiasm of cotton growers. However, Ma Junkai believes that the price stipulated in the temporary storage system will help restore cotton farmers' enthusiasm.

Ma Junkai told reporters, "because the income of cotton growers is less than that of other grain crops, the planting area in Dezhou area has obviously decreased this year. As far as I know, the Shandong area has dropped by 15%, and the planting area in Dezhou has decreased by 25%. This year, the domestic cotton planting area is decreasing in general."

But for the harvest situation, Ma Junkai said, we can not rely solely on the calculation of the planting area, and it will not be settled until the cotton harvest season in September. Ma Junkai stressed that the climatic conditions in August are very important before the cotton harvest. If there is continuous rainy weather, it will definitely affect the output of cotton.

Downstream: textile industry export advantage decline, small and medium-sized enterprises fear out.

The reporter inquired from the website of the Ministry of industry and information, the Ministry of industry and Commerce said in the analysis of the operation situation of China's textile industry in the first half of 2012, there are four main problems affecting the operation of the textile industry at present, namely, the lack of market demand, the continuous expansion of the domestic and foreign cotton price differentials, the intensified competition in the international market and the high cost of financing.

China Cotton Association data show that cotton textile enterprises 1~5 cumulative yarn production decreased by 1% over the same period last year, the decline continued to narrow, cloth production decreased by 1.1%, of which pure cotton cloth fell 2.4%, cotton blended fabric increased by 9.9%, chemical fiber cloth decreased significantly, cloth products 1~5 month cumulative year-on-year decline of 1%, but chemical fiber cloth still has a substantial increase.

At the same time, sales of the industry showed no signs of recovery, business orders gradually reduced, sales sluggish.

The overall efficiency of the textile industry has declined sharply.

In the first half of the year, China's textile industry showed a downward trend.

According to relevant information, Dezhou, Shandong is one of the key cotton producing areas in the country, and its cotton spinning capacity is 1/7 of Shandong and 1/20 of the whole country.

As Ma Junkai, Deputy Secretary General of Dezhou Cotton Association, he showed the frustration of the current textile enterprises to reporters.

Ma Junkai said, "as far as the whole textile industry is concerned, it can be divided into three categories.

All cotton textile enterprises which use cotton as raw material are in a state of loss.

Use cotton at the same time.

The mixed textile enterprises are in between micro deficit and small profits.

The new fiber enterprises, which do not use all cotton chemical fibers, have made profits, but their profitability has dropped significantly over the past few years.

Under the current macroeconomic situation in China, the situation of insufficient market demand will continue.

According to the Ministry of industry and information, the impact of the European sovereign debt crisis is still spreading, and the subsequent impact of the international financial crisis continues to emerge.

Song Jiening, a researcher of agriculture, forestry, animal husbandry and Fisheries of CIC, believes that the decline of international cotton prices is mainly due to the continued weakening of the international economy and the weak recovery in the international consumer market.

In addition to market demand and domestic and foreign differences, the financing cost of textile enterprises and the intensification of international market competition are not conducive to their development.

The Ministry of industry and Commerce said that thanks to the increase of China's comprehensive factor cost and the enhancement of textile competitiveness of neighboring countries, some of the purchase orders in the international market flowed to Southeast Asian countries, and the market share of textile and clothing products in China's major developed countries declined.

At the same time, a large amount of interest expense has become another bottleneck restricting the development of textile enterprises in the situation of slow growth of production and sales.

However, the situation will not improve significantly in the second half of the year. The Ministry of industry and Commerce said that the textile enterprises will still be in a difficult position in the second half of the year, and the export of textile and clothing will continue to grow at a low level. The overall growth of the industry will decline sharply compared with the previous year, and the deficit and loss of the deficit enterprises will be expanded. More small, medium and micro enterprises will face the risk of being eliminated.

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Southeast Asian countries' price advantage is gradually emerging.

According to the monthly report of China cotton textile enterprise production analysis released by the China Cotton Association in May, the domestic textile raw material market continued to decline in May, and the decline was larger than that in April. The number of enterprise purchases decreased by 9.8% compared with that of April, and the quantity of raw material procurement decreased. However, the number of imported cotton increased from the price advantage, and the number of purchases increased significantly, with a growth rate of 42.5%. This is the conclusion of the China Cotton Association after investigating 90 key cotton textile enterprises in 17 provinces.

"Generally speaking, cotton textile enterprises are faced with three major costs, labor costs, financing costs and raw material costs," Sun Liwu, an analyst with Zhuo Chuang's information cotton industry, told reporters.

Among them, the problem of raw material cost is very serious. In normal years, 1/4 of the demand in China will be imported every year. However, the market situation has changed. Since the second half of last year, the price of cotton in China and the international market price have been differentials and expanded.

For textile enterprises, the fluctuation of raw material prices has an obvious impact on production. Obviously, the price drop of two domestic and international cotton prices is far from the spread of price difference, so the price of raw materials such as upstream cotton will increase, and the price of downstream textiles will also decline.

With the reduction of raw material procurement, the main economic indicators and profits of textile enterprises continue to decline, and the phenomenon of small and medium-sized enterprises ceasing production and limiting production is becoming more serious.

However, from the data point of view, it seems that the current textile industry is not as bad as it expected.

According to the statistics of the National Bureau of statistics, the yarn production in May was 2 million 669 thousand tons, an increase of 1.3%, an increase of 11.2% over the same period last year.

In May, the export situation of our country was better than before, and the export volume of textile and clothing recovered to US $20 billion again, but it is still lower than that of other goods trade.

Customs statistics show that in May, China's textile and apparel exports amounted to 21 billion 830 million US dollars, an increase of 16.1% over the same period, an increase of 7.4% over the same period last year.

But this still can not cover up the current difficult situation, Song Jiening told reporters that the increase in domestic and foreign cotton prices will lead to a decline in the export advantages of China's textile enterprises.

In Southeast Asia and other countries, due to the gradual emergence of production and price advantages, the price advantage of China's textile industry will continue to decline, and China's textile industry will face a downturn in the international market share.

Source: cotton prices at home and abroad are about 4500 yuan, and imports increased by more than two times in May.

Domestic cotton

To a certain extent, the dilemma is caused by the difference between domestic and foreign cotton market. Since the fourth quarter of last year, the difference between domestic and foreign cotton prices has been widening.

Reporters learned from the Ministry of industry and commerce that as of July 5th, cotton prices at home and abroad were about 4500 yuan / ton, so that the increasing price difference between domestic and foreign cotton seriously weakened the international competitiveness of China's textile industry.

The huge difference between domestic and foreign cotton prices has also led enterprises to actively purchase foreign cotton. According to the China cotton situation monthly released by China Cotton Association, in May, the quantity of imported cotton imported by China's textile enterprises increased significantly, and the number of imported cotton in China kept at a high level.

The increase in domestic and foreign cotton prices has been widened.

"Last year, the state implemented temporary cotton storage and storage system to stabilize domestic cotton prices and protect the interests of cotton farmers. However, it increased the price of cotton at home and abroad, weakened the overall competitiveness of China's textile industry, and led to a decline in the export advantage of China's textile enterprises."

Song Jiening told reporters that the temporary cotton purchase and storage system implemented last year has caused the expansion of cotton price difference at home and abroad to a certain extent.

Many years ago, cotton purchase and storage system had been implemented in China. Cotton storage and storage system was implemented in 2004 and 2008.

Last year's temporary storage system was the temporary cotton storage and storage system in 13 cotton producing areas in China from September 1, 2011 to March 31, 2012.

According to the plan of collecting and storing, 13 cotton producing provinces in Xinjiang and Shandong are temporarily collecting and storing the price of standard grade lint to the warehouse price of 19800 yuan per ton.

Song Jiening believes that "the state has implemented a temporary cotton purchase and storage system, on the one hand, stabilizing domestic cotton prices, but on the other hand, because of the downward trend of international cotton, the price difference between domestic and foreign cotton has increased, and because of the quota of cotton imports, the domestic textile enterprises are facing higher production costs, leading to a decline in the export price advantage of domestic textile enterprises."

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Ma Junkai, Secretary General of Dezhou Cotton Association, told reporters that, following last year's implementation

After the temporary purchase and storage system, it will still be implemented this year, but Ma Junkai said that only when the price of cotton in the market is lower than the national purchase price will the system meet the requirements of purchasing and storing system. "The price of storage and purchase will increase by 600 yuan per ton this year, which is 20400 yuan per ton."

Enterprises actively buy foreign cotton

According to statistics from the General Administration of customs, China imported 502 thousand tons of cotton in May, an increase of 357 thousand tons compared with the same period last year, an increase of 246.2%.

1~5 months, China's total imports of 2 million 580 thousand tons of cotton, an increase of 113.8% over the same period.

As of May, 2011 cotton imported 4 million 250 thousand tons of cotton per year, an increase of 103.3% over the same period last year.

According to the China cotton situation monthly released by China Cotton Association in June, in May, the decline of international cotton prices was greater than domestic cotton prices, and the difference between domestic and foreign cotton prices increased by 1000 yuan / ton over April.

"Generally speaking, if the difference between the domestic and foreign markets is less than 1500 yuan per ton, domestic enterprises can still afford it, but the price differential will continue to increase from the second half of last year to 4000 yuan per ton," Sun Liwu told reporters.

Now China's cotton prices are higher than the international cotton price per ton of about 5000 yuan.

Sun Liwu told reporters that "China's imports of cotton in May increased by 246.2% over the same period last year. On the one hand, the domestic textile enterprises imported foreign cotton for the pursuit of inexpensive cotton materials, and on the other hand, the former was the main reason for the domestic cotton import quota in May."

However, while the imported cotton increased, the media revealed that in Qingdao Huangdao Port Free Trade Zone warehouse, a large number of imported cotton were overloaded, and the number of warehouses exceeded the number of outlets.

It is not only the increase of port stock, but also the inventory level of the whole cotton industry in history.

Reporters learned from Zhuo Chuang information, through Zhuo Chuang information on cotton processing enterprises, warehousing logistics enterprises and circulation traders conducted a sub provincial survey shows that as of the end of June, the national cotton business inventories of 1 million 730 thousand tons

(excluding cotton and cotton entering the circulation, excluding national cotton reserves), the survey data decreased by 400 thousand tons from the previous month. Of them, Xinjiang's commercial stocks (400 thousand yuan) and the mainland's commercial stocks were 1 million 330 thousand tons.

Even though this month's inventory has decreased, it is still running high, and the phenomenon of increasing cotton inventories does not seem to be unique to China. According to the US monthly report of the Ministry of agriculture's monthly supply and demand report, in February, the supply and demand report predicted 13 million 232 thousand tons of global cotton stocks, and the forecast for March was 13 million 569 thousand tons. In April, the supply and demand report predicted 14 million 386 thousand tons, until May, the global stock forecast was 16 million 57 thousand tons, May May, the growth rate was 21.35%.

The grim situation is spreading all over the world.