The Cost Is Not Down, But It Is Difficult To Raise Cotton Prices.

After the ups and downs of 2010/2011, cotton prices in China in the first half of 2012 were relatively stable.

However, in domestic storage and purchase

Under the support, cotton price difference at home and abroad has reached a record high, which brings great trouble to textile enterprises.

In the global economic environment and global cotton consumption situation is not satisfactory, excessive use of cotton costs greatly weakened the international competitiveness of enterprises.

Looking ahead, the supply pressure of cotton will continue in the second half of the year. The huge inventory will cause greater suppression of cotton prices in the medium and long term, and the textile industry needs to recover slowly. The State purchasing and storage policy may temporarily boost the price of new cotton, but the national storage and storage will still be a potential threat to cotton prices.

It is still going to be a dilemma.

Collection and storage

Domestic and foreign spreads are the highest in history.

Since 2012, domestic and foreign cotton prices have shown a weak trend overall.

1~2 month, European and American economic data better than expected and other factors, the international market cotton prices rebounded, ICE cotton futures contract close to the 100 cents mark; by domestic storage and purchase of cotton and cotton trend to boost, Zheng cotton index once stood at 22000 yuan / ton pass; in March, by rating agencies following down some euro area credit rating, the United States Department of agriculture to increase the global cotton end inventory and other factors, domestic and foreign cotton prices gradually dropped.

In May, under the influence of domestic 1 million tons import quota and textile industry demand, the domestic cotton market broke down the pre finishing platform, showing a deep adjustment trend. The Zheng cotton index broke the 20000 pass and dropped to the 18000 pass.

Under the impact of the European debt crisis and USDA's continuous global inventory forecast, the international cotton market showed a continuous downward trend. The ICE cotton contract was once down to 65 cents / pound, creating a new low in the year.

June, international

The decline in cotton prices, the sharp increase in foreign low-cost cotton imports, the decline in textile and clothing sales and other factors, the downstream textile enterprises to buy domestic cotton enthusiasm is not high, the domestic market cotton prices continue to decline slightly.

In June, the average selling price of grade three cotton in the domestic market was 18562 yuan per ton, down 3.4% from last month, which is 24.1% lower than that of the higher price level in the same period last year.

On the international side, the market failed to anticipate the launch of the third round of quantitative easing monetary policy by the Federal Reserve. The dollar appreciation led to a fall in commodity prices. The economic climate index of Germany and France and other European countries declined, and the uncertainty of the world economic recovery increased.

Affected by these factors, cotton prices in the international market continued to decline sharply last month.

The cotton futures price recently delivered by the New York stock exchange in June was $1637 per ton, down 6.1% from last month, down 52.3% from the same period last year.

In addition, because of the falling price of cotton in the international market, the cost of cotton imports continues to be lower than domestic cotton prices, and the gap has widened.

Since the year of 2011/2012, the policy of purchasing and storage and the purchasing and storage policy of the coming year have supported the domestic cotton price, while the price of cotton has been around the world.

The environment is worrying, the global cotton consumption situation is not satisfactory, and the global cotton terminal inventory has increased sharply.

Because domestic cotton prices fell less than the decline of international cotton prices, domestic cotton prices gradually changed from less than foreign cotton prices to higher than foreign cotton prices, and the spread of prices showed an expansion trend.

In May 31, 2012, the cotton price index of China was 328 yuan, 18731 yuan / ton, the import cotton price index, the 1% tariff and the sliding tax discount of M cotton were 13441 yuan / ton and 13954 yuan / ton respectively, and the difference between the outer cotton and the domestic cotton was 5290 yuan / ton and 4777 yuan / ton respectively.

Compared with previous years, cotton price difference at home and abroad has reached a record high this year.

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Structural pformation

Shrinking cotton demand

Because the international cotton price is much lower than the domestic cotton price, many textile enterprises turn to low price imported cotton.

Customs data show that in the first 6 months of 2012, a total of 3 million 55 thousand tons of cotton were imported, an increase of 130.2% over the same period last year.

In the first 10 months of 2011/2012 (September 2011 ~2012 June), China imported a total of 4 million 730 thousand tons of cotton, an increase of 113.8% over the same period last year, reaching the highest level in the same period of history.

According to historical data, the total import volume of cotton this year will no longer be more uncertain than before.

From the perspective of imported cotton countries, the proportion of US cotton imports is more serious than that of India cotton.

Due to the large spread of cotton market at home and abroad, domestic cotton consuming enterprises prefer to import cotton. Besides the national storage, domestic cotton is not optimistic about the actual sales situation.

However, under the control of import quotas, many cotton textile enterprises can not purchase imported cotton. Some enterprises mainly use domestic cotton as raw material, which results in high price of raw materials and low price of products, and causes many domestic cotton textile enterprises to lose money, which eventually makes the demand for cotton downstream more shrunk.

It is understood that at present the sliding quota import quota is "too few". In Jiangsu, Shandong, Henan and other places, some small and medium cotton mills and weaving mills can not use low price cotton because they can not get import quotas, and the gauze inventory causes tight cash flow, so they have to reduce production or stop production.

In addition, it is worth noting that the demand for pure cotton products is obviously replaced by cotton blended and non cotton products.

According to the data monitored by the China Cotton Textile Industry Association and the investigation and interview of some enterprises, the phenomenon of reducing the proportion of pure cotton products because of the domestic cotton price being not competitive is widespread in the process of adjusting the product structure.

The emergence of high priced cotton to produce alternative products, the application of non cotton fibers will become the development trend of textile products in the future, and the proportion of cotton products will be reduced.

supply exceeds demand

Short term trend is hard to change

According to the insiders, the domestic cotton market fundamentals are still relatively poor, especially the demand for downstream textile enterprises is still weak, small and medium-sized textile enterprises stop production or limit production, and textile and garment exports are declining, and cotton market demand does not support cotton price rise.

At present, the biggest support factor for cotton market in China is that the purchase price of national cotton reserves will be set at 20400 yuan / ton in the new year, but if the fundamentals are not improved, the cotton price will still oscillate.

Under the background of the relevant departments to strengthen the control of imported cotton, the domestic cotton market needs to pay more attention to the acquisition and sale of national cotton reserves, and the guiding role of the policy will determine the rise and fall of cotton prices.

Cotton storage and storage in 2011/2012 totaled 3 million 130 thousand and 320 tons. The purchase and storage work has stabilized the domestic cotton prices and protected the interests of cotton farmers.

Because domestic cotton market performance is weak and internal and external spreads are at a high level, if the new year's 20400 yuan / ton storage price is implemented, it is estimated that storage will continue to be the main channel for cotton sales. However, with the huge increase of reserve cotton stocks, the future sale and disposal of national cotton will bring greater uncertainty to the global cotton market, and in general, it will cause greater pressure on cotton prices in the new year.

At the recently held working conference on reserve cotton business, the relevant departments predicted that China's total cotton output in the 2012/2013 year was 6 million 860 thousand tons, down 9.1% from the same period last year, and the total market volume of the total cotton could be 12 million 929 thousand and 300 tons, excluding the storage and other factors, and the market could supply about 9 million tons of cotton.

Relevant departments responsible person said that from the current cotton consumption situation, it is possible that the new year cotton market will meet the start-up conditions of the temporary storage and purchase plan, and the reserves may exceed the previous year.

In addition, the national cotton market monitoring system survey results show that in 2012, the national cotton sowing area was 71 million 787 thousand mu, a decrease of 7 million 631 thousand mu compared with the same period, a decrease of 9.6%, and the cotton output in the new year is expected to decline.

However, the USDA supply and demand report predicts that the global cotton carry over inventory in 2012/2013 will reach a record 16 million 223 thousand tons, 10% higher than the previous year, and the stock consumption ratio climbed to 68.3%, of which China's cotton carry over inventory is 6 million 815 thousand and 500 tons, and the inventory consumption ratio has climbed to 78.25%.

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Comprehensive analysis, 2011/2012

The supply pressure will continue to 2012/2013, and the huge inventory will be a great restraint on the medium and long term cotton prices.

As the export situation in the second half of the year is hard to pick up quickly, and the difference between domestic and foreign prices of cotton prices has swallowed up corporate profits, the textile industry is still not optimistic.

Domestic and foreign cotton price difference is at a high level, cotton imports keep growing, and port high cotton inventory will suppress domestic cotton spot price trend.

In the second half of this year, the new cotton purchase and storage plan will be implemented in the second half of the year. The purchase and storage price will be further raised to 20400 yuan / ton, which will constitute policy support for new cotton and will become the main channel for new cotton sales.

Due to the large storage capacity in the previous year, the storage and disposal of national cotton reserves will bring greater risks to the cotton market. The trend of cotton in the second half of this year will largely depend on the guidance of the national reserve policy.

A person in charge of the enterprise said that because the size of the acquisition and sale of national cotton can affect the supply and demand pattern of the domestic cotton market, the current market is particularly concerned about the news in this regard.

However, the import cotton is still a large backlog, and the price of imported cotton is still much lower than that of domestic cotton. In addition, the export of cotton textiles is not smooth in China, and domestic cotton prices can hardly rise sharply in the short term.