Cotton Market: The Industrial Chain Is In A Predicament And The Predicament Needs To Be Recovered.

Cotton prices returned to their starting point two years later.

Looking back at the beginning of September two years ago, Zheng cotton started from 19000 yuan / ton, and rose to 33000 yuan / ton in two months. It fell back after reaching its peak in February 2011, and now it is back to the starting point.

Cotton prices ride on roller coaster, not only to stimulate the industry chain, including cotton farmers, processing purchasers and downstream cotton spinning enterprises, and so on, the pressure is not between you and me.

It is also, therefore, sluggish.

Strange phenomena are growing, planting efficiency has not increased, the import quota has been fired, and the industry has limited production and shut down.

Economic downturn - demand sluggish spinning

Enterprises suffer from difficulties - the pressure of purchasing processors and the loss of cotton farmers' income, and the pressure is extending upward along the industrial chain.

"The bell must be unlocked."

Professionals pointed out that the cotton industry chain has been caught up in a complex chain. The crux of the problem lies in the global economic downturn and sluggish demand.

Despite the fact that cotton has passed through the year, the spring is not yet in order to solve the problem. Only when the economy is reestablished and the consumption is enhanced.

Dilemma of industrial chain

This is an industry dilemma.

On the one hand, the decline in external demand has led to insufficient orders in export enterprises, and the pressure on China's textile and clothing exports has increased significantly.

Customs statistics show that in 1-8 months, China's clothing exports amounted to 99 billion 480 million US dollars, down 0.7% from the same period last year, and textile exports were 62 billion 510 million US dollars, down 0.7% from the same period last year. On the other hand, domestic demand also showed weakness.

According to relevant statistics, the retail sales of clothing shoes and hats and needle textiles increased by 17% over the same period of 1-7, representing a decrease of 7.2 percentage points compared with the same period last year. If price factors were deducted, the domestic sales value of textile enterprises above designated size increased 12.5% over the same period last year, down 20.3 percentage points from the same period last year.

Reduction of terminal demand

Caught in a dilemma.

First of all, the impact of the textile and garment industry, reduced orders and poor sales, resulting in a lot of textile and garment industry high inventory; downstream inventory backlog and inhibit the demand for the middle reaches and upstream enterprises, many enterprises have seen a substantial decline in profits.

Take the world's largest color spinning leader Huafu color spinning as an example, which reported that the company faced with the domestic and foreign cotton price differential, the terminal price reduction and other market difficulties, the net profit of the reporting period was about 62 million 210 thousand yuan, down 74.39% over the same period.

Lint processing enterprises are also struggling. Many areas still reduce production losses by cutting production and production.

Guo Yaozhong, general manager of Shandong Heng Xiang textile limited liability company, said: "cotton price" roller coaster "last year, enterprises buy a lot of raw materials at a low price.

With the reduction of orders this year, a large number of raw materials are backlog.

From the end of last year to the present, 80% of cotton textile enterprises in Shandong and Heze have reduced their losses by reducing production or shutting down production.

All kinds of strange appearance

On the one hand, after the big drop, the cotton was heavily overloaded in the importers' hands. On the other hand, the textile enterprises were waiting for quotas to purchase cotton for production.

"Since 2012, domestic cotton prices have always been higher than the international market."

Sun Huaibin, Deputy Secretary General of the China Textile Industry Federation and director of the news center, said.

On the 12 day of September, the US cotton quotes 15216 yuan / ton and the current price of 18700 yuan in the domestic market, the difference between the two is 3484 yuan, and the difference of the previous price is over 5000 yuan.

Insiders complain that many manufacturers are forced to purchase extra cotton at a price of three thousand or four thousand yuan or more per ton of quotas.

Someone has calculated such an account. Even if the cotton import quotas are lower than the quotas of 2000 yuan / ton, the import value of 1 million tons of cotton will also derive the value space of 2 billion yuan.

According to the survey of 100 cotton textile enterprises in China's Cotton Textile Industry Association, at least 30% of the above scale enterprises have limited production, and more than half of the small and medium-sized enterprises stop production because of the high cost of cotton production. Most enterprises lose more than 2000 yuan per ton of pure cotton yarn.

"In contrast, at least 1 million tons of imported cotton are still hoarding at ports as of July."

First textile network analyst Wang Qian said.

Cotton farmers have two difficulties at home and abroad

The sluggish demand makes the whole cotton industry chain face severe challenges. If middlemen and downstream enterprises can make a slight difference in the pformation and restriction of production, the upstream of the industrial chain, cotton growers and countries that are relatively independent from the industrial chain, will be much more passive.

"Cotton at the moment hurts farmers."

One industry association said that the price of agricultural and sideline products rose sharply since last year. In the two or three month of this year, the state raised the lowest purchase price of rice and wheat for two consecutive times, and the comprehensive direct subsidy and seed subsidy of grain crops increased further.

"In the context of rising costs and rising prices of other varieties, cotton prices will not advance."

Ma Junkai, Secretary General of the Dezhou Cotton Association of Shandong, said that at present, the local pepper yield is about 3000 yuan per mu, planting corn and wheat can yield about 1600 yuan, while the income of planting cotton is only about 1300 yuan.

Ma Junkai introduced that in 2012, cotton planting in Dezhou has decreased by 200 thousand mu compared with last year, and it will also reduce about 20% to 1 million acres next year, which is more than half of that before 2008.

Cotton farmers are injured, and the country is also in a dilemma. The departments concerned have been caught in a difficult knot, whether in the issue of quotas or reserves.

"Protect cotton farmers or protect cotton enterprises?" on the one hand, there is no place to put cotton in the port, while the other is not suitable for the right price of cotton enterprises, quotas become the industry can not get over the ridge.

"Issuing no import quotas is a headache for the country."

Hebel, an analyst with GF, said that issuing quotas and importing large quantities of cheap cotton would make China become the Saviour of the global cotton growers, and how to deal with the loss of the business. If the quota is not issued, the enterprises will use the high cost cotton and face the main competitors such as Southeast Asia.

On the other hand, cotton farmers and textile enterprises are in a dilemma.

The same is true for collecting and storing.

2011/2012 annual storage capacity of more than 4 million tons of cotton inside and outside this year cotton raising and storage price to 20400 yuan / ton storage, demand downturn, domestic enterprises will still take the acquisition of resources as the primary task this year, so whether from the perspective of capital or storage capacity, the state reserves will face a great challenge.

Since September 3rd, the reserve price has been set at 18500 yuan, which has about 2000-3000 yuan / ton of premium on the reserve cotton. In this estimation, the loss of 4 million tons of cotton is about 8 billion yuan.

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Cracking the dilemma is yet to be recovered

Economic weakness makes cotton yarn demand sluggish, many textile enterprises have a crisis. With the pressure pmission to the intermediate links such as acquisition and processing, the most upstream cotton farmers have not been spared.

On the other hand, the troubled industrial chain also made the departments concerned go back to their feet, and the two major control measures used in the past were awkward.

When the textile is motionless, the cotton price is difficult to move.

Wang Yong, a senior analyst at Hongyuan futures, believes that the crux of the current domestic cotton textile industry's predicament lies in its lack of demand.

Once the textile enterprises stop production and lose production due to losses, they will have an impact on the sales of domestic cotton and will directly damage the vital interests of domestic cotton growers.

This is a complete industrial chain. It can be seen as a whole.

Experts believe that only with the gradual increase in demand for clothing market, the chain of cotton industry chain is expected to open.

Only in the current situation, "this day is not yet known when it will come, but it will be difficult for young people to make a difference."

A professional chamber of Commerce said.

Base on quota reserve

There are many problems and many ways.

According to the insiders interviewed by reporters, for the purpose of protecting cotton farmers and the industrial chain, we should look for ideas and try them on the basis of reserves and quotas.

First of all, we should establish a cotton purchase and storage policy and a protection mode combining the target price policy of cotton farmers.

For example, the annual target price of seed cotton is determined. The state purchases the price according to this price, or the farmer sells the cotton according to the market price. Then according to the difference between the target price and the market price and the average yield per unit area, the amount of subsidy per mu is determined, which is directly distributed to the farmers before the annual spring ploughing.

An industry source in Xinjiang suggested that, because of the passive status and decentralization of cotton farmers' sale, it is better to directly establish a basic seed cotton purchase protection price, and publicize the linen percentage and other related indicators, so as to circumvent the current policy drawbacks to a certain extent.

Secondly, as China's dependence on imported cotton is getting stronger and stronger, it is necessary to gradually establish the import and export mechanism of imported cotton, which will not only increase the reserves of cotton resources in China, but will also cause great interference to domestic supply. It can also reduce the cost of storage and purchase by using the advantage of international cotton price lower than domestic cotton price and effectively solve the problem of quota speculation.

Thirdly, the formulation of reserve policy should give priority to changes in supply and demand rather than simple prices.

Dong Shuangwei, director of futures research and development, believes that regulation should follow market rules while taking into account global supply and demand as well as commodity characteristics.

Considering the margin of safety, the reserve amount of cotton in the state should be based on the consumption of cotton in normal three months. In the special period, we should consider enlarging the storage capacity or increasing the throwing reserves, but the reference standard should be the dynamic change of market supply and demand.