Cotton Market Demand Is Bigger Than Supply Cotton High Price Era Or Will Continue Until Next Year.

Recently, the Zhengzhou Mercantile Exchange cotton Futures contracts show the phenomenon of recent contracts rising to forward contracts, known as spot premiums, and the same in the US cotton market.

Barclays Capital pointed out in an analysis report that from 2006, the average contract rate of the US cotton futures contract for the next month's contract is 1.7%, but the recent upward trend in the future is very unusual in cotton futures.

"Cotton futures in the past few years had a very small premium, indicating that the current demand for cotton is far greater than that of the supply, and the market is willing to pay high prices for cash." A futures analyst in Shanghai told reporters this. {page_break}

　 "No robbing, no way to start."

"The bad weather conditions of the Yangtze River and the the Yellow River Valley this year have caused the output of cotton in the mainland not only to be small but also poor in quality," he said. "The new cotton market has been postponed for about 20 days." Galaxy futures analyst Zhang Haiyuan told the first financial daily financial intelligence reporter.

Faced with this situation, the head of a cotton processing enterprise in Henan province told reporters: "because of the poor quality of cotton in the mainland this year, we had to use high-grade cotton in Xinjiang, but Xinjiang cotton also cut production." The factory is waiting for the cotton to start, so we have to rush to buy it, but the amount we have won is only half the amount we received last year.

On the one hand, there is a shortage of cash. On the other hand, it is Spin The rapid growth of enterprise demand. Coupled with the hype of inflation under inflation, since September, the price of cotton has been shocked. Even though the new cotton market has not yet been put on the market, it has repeatedly refreshed its historical record.

"Cotton is now growing quite out of fashion. For the first time in my life, I saw such a surge. The cotton purchasers described cotton prices up. "Cotton is now a daily price. It's like sitting on a rocket."

China Cotton Association website monitoring data show that in September 1st, China's cotton price 328 index (standard cotton) was only 18002 yuan / ton, and by November 3rd, the index soared to 27701 yuan / ton, the increase has reached 53.88%. Meanwhile, Zhengzhou cotton rose all the way from 17895 yuan / ton in early September, and in November 3rd, the main contract CF1105 hit a new high of 29980 yuan / ton.

Domestic cotton prices are high, and national reserves are thrown away, but still can not meet the demand. Many factories can only fill the gap with imported cotton and cotton yarn. Shanghai cotton import company pry Ma Tai, the person in charge told reporters: "after the financial crisis, textile enterprises benefit well. Even though foreign suppliers are picking on customers this year, and the goods are relatively small, we import much more this year than last year.

Huge consumption of cotton also led to a decline in inventories. Supply and demand data from the US Department of agriculture (USDA) in October showed that the supply and demand gap of global cotton in October was 890 thousand tons, and the inventory consumption ratio will drop to 37% this year. International cotton prices and inventory consumption ratio linkage significantly. In the case of stock consumption ratio lower than the lowest level since 1993/1994, the December ICE contract for London Intercontinental Exchange (ICE) has been refreshed for 140 years.

Cotton re pricing

Under the stimulation of unexpected factors such as bad climate and devaluation of the US dollar, there is a certain "irrational" factor in the rise of cotton prices. However, some analysts have pointed out that cotton is undergoing a reasonable revaluation process.

Professor Mao Shuchun, a researcher at the Cotton Research Institute of the Chinese Academy of Agricultural Sciences, said in an interview with our reporter: "the global agricultural structure 20~30 is a cycle. The production layout of a large agricultural product will change a lot in one cycle. "

Mao Shuchun told reporters that in the first 10 years of the new century, the cotton planting area of the whole world expanded, and the total output increased to a record high, which increased by several million tons over the previous 10 years. At the same time, cotton prices dropped by 30% in the 10 years compared with that in the last century, and in 90s, the price of cotton decreased by 30% in 90s.

Because of the decline in unit yield of cotton, there has been a crisis in cotton production.

"Cotton prices were too low before. Especially in the year of financial crisis, farmers lost too much and lost 43 billion 100 million yuan. Yields are falling, and production costs, especially labor costs, are rising. In addition, the management of cotton planting is time-consuming and the rural labor force is constantly exported to the city. Many farmers have to give up planting cotton. Mao Shuchun pointed out at the same time, "in fact, the cotton production per unit level in China is higher than the world average level, and China also has certain advantages in technology. This year's high cotton prices may stimulate the expansion of planting area next year, but in any case, the low price will not come back in the past few years."

When does cotton price return rationally?

In retrospect, after the US cotton broke through the 80~90 cents / pound area, the price reversed V shape, and the sharp drop was repeated. At present, the high price of 140 cents / pound is already in danger.

After the boom, the procurement of textile enterprises was cautious, and the space for cotton prices to continue to rise has become narrow, and it is likely to be a sharp fall.

"Although this high price has been accepted by many businesses, the most worrying thing is the risk of falling prices," Mr. Zhao, director of a cotton import and export middleman in Shanghai, told reporters.

Many cotton spinning enterprises in 2003 cotton prices soared to 19500 yuan / ton, suddenly dropped to 14500 yuan / ton market is still fresh in mind, and now the Xinjiang market cotton has also appeared 30 thousand yuan / ton price, much more fierce than in 2003, once the sharp rise and fall again repeat, many cotton enterprises will face serious losses.

But analysts believe there is little chance of a sharp fall this year.

Zhang Haiyuan pointed out: "Xinjiang cotton is now being transported to the mainland. It will take half a month to 1 months for a large number of listings. Cotton prices may fluctuate a little at that time, but the rising trend has not changed yet. Because of the rising price of cotton in the upstream this year, and the price of yarn has gone up more, the profit of the middle spinning mill is higher than in previous years, which has created certain conditions for maintaining high cotton prices.

"High prices will continue until at least June next year, mainly for high cotton prices to stimulate the recovery of global cotton production next year. If the cotton planting area increases substantially, the price will inevitably be callback. But without big resources, prices will continue to rise. It also depends on the production of the southern hemisphere. According to Mao Shuchun, "it seems that after June next year Cotton price It may be stable or fall to a reasonable price. According to the calculation of farmers' production cost, the reasonable price of farmers' cotton should be around 15000 yuan / ton, and seed cotton should be around 7.6 yuan / kg.