Cotton Prices Have Been So Low For Four Years That Cotton Farmers Are Unable To Find Their Way.

Affected by supply and demand, cotton prices fell to the lowest level in four years this year, reaching 15000 yuan / ton. Affected by this, cotton farmers in major cotton producing areas such as Shandong and Hebei are quite "injured" and the planting area has dropped sharply. Downstream manufacturers began to develop new materials as early as a few years ago when the price of cotton rose, so as to reduce the content of pure cotton and get rid of the difficulty of operation. The demand for cotton has shrunk, which has made cotton mills that originally planned to buy on the scale lose confidence and hesitate to act hastily.

Cotton grower

The purchase price has dropped, and the planting area has dropped sharply.

"The price of cotton this year is really very low, which is a little different from the psychological expectation price." In October 13th, Wang Jianjun, the head of Nong Xi Cotton Professional Cooperative in Qinhuangdao Township, Binzhou City, Shandong Province, sighed. Now the purchasing price of seed traders has dropped to 3.1 yuan / Jin.

In Wang Jianjun's memory, cotton prices have not been so low for many years. "In 2007 and 2008, it began to rise, reaching about 7 yuan a kilogram in 2009 and 2010, which has dropped back in the past two years, but generally it is more than 4 yuan." He told reporters: "in fact, 4 yuan is our psychological price."

Wang Jianjun listed the cost of cotton planting: "if you grow cotton on your own, count the agricultural resources, manpower, etc., the cost of an acre is about 1200 yuan." In the first two years, because of flooding, the average yield per mu is about 400 Jin. This year the weather is good, and the yield per mu can reach about 550 Jin.

"Cotton farmers of their own homes, three yuan a price, are generally reluctant to buy." Wang Jianjun said, but for the tenant farmers, "calculate the rent money, there is only one word" compensate ", but it can only be recognized.

Because of the downward trend of cotton prices in recent two years, farmers' enthusiasm for planting has been reduced. "My co-operative now has more than 50000 acres, but next year there will be about 30 million acres left." He said. As an important cotton producing area in Shandong, the cotton planting area in Heze has been around 1 million 200 thousand mu this year. Compared with last year's 1 million 800 thousand mu, the area of cotton planting was reduced by 1/3.

Not only in Shandong, but also in other cotton producing areas. A data reporter found that in 2010~2012 years, the cotton planting area in Gansu province was around 700 thousand mu. In 2013, the cotton planting area in the province was 611 thousand mu, a decrease of 112 thousand mu compared with that of the previous year, and a decrease of 15.5%. The output of 71 thousand tons was reduced by 10 thousand tons compared with that of the previous year, and decreased by 12.3%.

　 　 clothing enterprise

Habit of using new materials to reduce cotton content in garments

Reporters also found that the rise in cotton prices in the past few years forced some textile enterprises to explore new materials to reduce the content of pure cotton in their products.

Underwear shop in Liqun commercial building, underwear made of modal and bamboo charcoal fiber accounts for half of the country. "Cotton prices have gone up in the past few years and can only be replaced by modal cotton." The salesperson of Ttiumph counters told reporters that the 50% products launched by the company now contain modal.

In the long run, the production of new materials, not restricted by single raw materials, is a good outlet for the development of enterprises. "We are also using some materials such as soybean fiber to ease the pressure on cotton prices." However, the decline of cotton prices is not enough for textile enterprises to keep up with the increase of labor costs. Therefore, the decline in clothing prices is also very difficult.

When the cotton price goes down, will the clothes purchased by the citizens be cheaper? The relevant staff of the island Garment Association told reporters that the impact of the fall in cotton prices on the terminal market will become apparent next year, because the cotton used by the garment enterprises this year was purchased last year.

Exit enterprise

In order to ensure cost, processing enterprises would rather break the contract.

"In order to ensure delivery on time, we have to add advance payments to downstream processing enterprises." Ms. Lee, who specializes in textile exports, told reporters that the advance payment was about 30%, and the remaining part should be repaid at the time of delivery. This year, in order to improve the production enthusiasm of downstream processing enterprises, their advance payments are added at any time according to the schedule, and they have paid all the funds before delivery.

"Before the rise in cotton prices has brought about a lot of pressure on the enterprises to take orders, many processing enterprises are willing to break the contract and do not lose money." Ms. Li said that in order to ensure the timely completion of export orders, their company had to add advance payments and send staff to supervise production.

"Many cotton textile enterprises in Qingdao have slowed down production." City textile association responsible person said that in response to cotton price fluctuations, many enterprises have taken measures, "the first is to wait and see prices, adopt flexible orders, give up the medium and long term big list; second, adjust the product mix, continue to develop new varieties, to deal with fluctuations in raw materials."

The International Cotton Advisory Committee (ICAC) recently indicated that the global cotton prices in will continue to be under pressure. Although the year-end inventory forecast for cotton in a record 2014/15 year has been cut down, it will not solve the problem. ICAC reduced the global cotton year-end inventory in 2014/15 to 21 million 470 thousand tons from 22 million 250 thousand tonnes in September, but still a record high. 2014/15 is expected to have an oversupply of global cotton market for third consecutive years.

Cotton enterprises

"Money" is uncertain, cotton enterprises buy more.

Such a market performance, let cotton enterprises more wait and see. According to Wang Jianjun, the purchase amount of cotton enterprises is low this year. "A lot of 400 enterprises near our home are not very enthusiastic this year, and even have warehouses for food." According to media reports, Hubei, Anhui, Jiangsu, the general type 400 enterprises to buy seed cotton 3~5 kg a day, compared with the same period last year's 20~30 kg scale is difficult to mention.

There is only one couple. At the end of September, the survey results released by the Heze Municipal Development and Reform Commission showed that no company has ever bought a scale. After the acquisition of cotton purchase price in 2013, the cotton enterprises began to scale up in September 1st. Last year, the purchase amount of seed cotton was over 20 million kg. Compared with last year, cotton enterprises have opened their scales for nearly a month later than usual.

What makes cotton enterprises difficult is the uncertainty of the market. Affected by the domestic and international cotton futures market, the price of cotton has declined, and the spot market has been weakening. The price of cotton coming in is difficult to sell or sell at a reduced price after processing. The risk of loss is relatively large. Textile enterprises have been operating hard and the demand for cotton has shrunk, leading to the loss of confidence in the cotton enterprises that were originally drawn up by the scale, and the psychological reluctance of cotton farmers. Many cotton enterprises dare not price the purchase of the scale.

　　 Analysis

More planting and less demand led to a four year low.

Cotton prices have dropped to their lowest level since a record high in 2010. Wei Linyan, consultant of Jinqiao textile network, said that the cotton price for delivery orders in December this year was 49.69 euro cents (62.59 cents) per pound, which only went back to October 7th in 2009. China has announced a reduction in imports, and cotton prices have plummeted by 26% compared with last year.

According to the survey data, in 2013, the end of the world cotton inventory was 15 million 60 thousand tons, consumption of 23 million 180 thousand tons, inventory consumption ratio of 65%; China's cotton terminal inventory 8 million 190 thousand tons, inventory consumption ratio of 106%; the global cotton supply oversupply pattern in the past two years is difficult to change. The Commerce Department said a few weeks ago that the market was in full transition. Huge cotton stocks are sufficient to meet China's demand in the next 4 to 5 years. Only after this stage can China return to the market and push prices up again.

The cotton price crisis that shook the textile industry in 2010 was largely attributable to China. As China expects cotton prices to rise, it buys large quantities of stocks, pushing up cotton prices, while others are looking for the remaining cotton stocks.

For the time being, one of the obvious consequences of low price and China's withdrawal from the cotton trading market is that India will catch up with China in cotton production. India's cotton output reaches 30 million packs, compared with China's cotton output of 29 million 500 thousand bales this year, while last year's output reached 32 million packs.

Mr. Wei believes that planting more and reducing demand are the main reasons for the decline of cotton prices, plus the domestic enterprises like to import cotton. Because the price of imported cotton is lower than domestic, the stock of cotton is very large at present, and the price will remain low.