How Futures Market Responds To New Cotton Price Policy

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Xiaobian of the network to introduce the futures market is how to respond to the new cotton price policy?

With the start of the state

Cotton pilot reform, implementation of cotton temporary storage for 3 years ended, cotton prices gradually returned to market, the processing and circulation enterprises will face major changes in the market environment, cotton futures hedging function is more and more important.

In October 18th, the "2014 Zhengzhou agricultural products (cotton) futures forum", with the theme of "cotton futures market new policy, new situation and new strategy", was held in Zhengzhou.

The State Council Development Research Center, China national supply and marketing cooperative society, China Cotton Association, China Futures Industry Association, Henan finance office and Henan securities regulatory bureau related leaders, as well as some large cotton enterprises, related institutional investors, Futures Company and other industry representatives attended the forum more than 300 people.

The participants agreed that the implementation of the pilot cotton price reform could effectively protect the interests of the vast majority of cotton farmers, help reduce the production costs of cotton textile enterprises, and help restore the competitiveness of China's cotton textile industry in the international market.

Zhang Fan, chairman of the Zhengzhou commodity exchange, said that the core and most essential effect of the cotton target price reform experiment is the gradual play a decisive role of the market mechanism in the price formation.

The futures market is an important part of the market system.

Enterprises should make full use of the role of futures and derivatives to make the cotton market manage risks and hedge risks in the overall industrial chain.

Cotton enterprises should make good use of the benchmark function of futures market.

Practice at home and abroad has repeatedly shown that futures market has the function of price discovery and hedging, and plays an irreplaceable role in improving the price mechanism of agricultural products.

The introduction of the new cotton price policy has greatly activated the cotton futures market and made the cotton futures market gradually play the role of discovering the price and hedging of the cotton market.

Wang Wanxiang, general manager of China Cotton Group Co., Ltd. pointed out that although domestic and international cotton price linkage has been strengthened and the price differentials have been narrowed, the domestic cotton market still has relative independence, because every year, we must strictly control imports. This makes domestic cotton prices not only depend on the price of the international market, but also depends on the affordability of domestic textile enterprises and the price of cotton that the processing enterprises receive at any price.

Cotton futures market can reflect the situation of domestic cotton market most accurately and accurately. Therefore, cotton enterprises should make full use of hedging and price discovery function of cotton futures to make the operation more robust and avoid risks.

Yang Li, general manager of the Chao Ge Textile Group, pointed out that the textile factory focuses on how to raise the production level, and reduce costs through management, increase profits, achieve differential competition, and ultimately increase profits.

Cotton accounts for 70% of the total cost of production, and cotton prices fluctuate drastically, which is a great risk for textile mills.

Therefore, textile mills should take an active part in futures and use futures hedging, price discovery and other functions to avoid risks.

Some enterprises are using the function of futures effectively and innovating the management mode.

Hubei Yinfeng Cotton Corp has made certain achievements in the company + cooperatives + cotton farmers and the order + futures mode.

Yinfeng has established 36 cotton cooperatives in Hubei, Shandong and Xinjiang. It has established close ties with 16 counties and 205 villages, and has been able to drive 15448 households.

Yan Feng, general manager of Yinfeng company, talks about how the futures market should be close to spot and entity enterprises. Through Yinfeng mode, it can base on the base to radiate the surrounding areas, set up cooperatives, connect the cotton farmers of thousands of households, and ultimately control the high-quality cotton resources.

At the same time, through the cotton farmers to give pesticides, fertilizers, two rebates and other forms of help, to achieve a win-win situation of cotton farmers and enterprises.

The price of forward contracts, such as seed cotton purchase price is higher than market price, can be hedging through market and locking risks.

The Yinfeng mode is conducive to the implementation and implementation of the direct subsidy policy.

Zhang Yanlin, deputy director of supply and marketing cooperatives of Xinjiang production and Construction Corps, introduced that the Xinjiang production and Construction Corps recently introduced targeted, operational and feasible system measures to implement unified trading rules, unified settlement platform, unified use of cotton brand, unified sales and pricing system, and actively enter the futures market to achieve hedging.

In fact, there are some positive changes in the cotton futures market.

Zhang Fan, chairman of the Zhengzhou commodity exchange, said that the number of enterprises involved in cotton business increased by 45% over the same period last year, and that the number of corporate clients involved in cotton futures trading increased by 78% over the same period last year. The number of corporate clients involved in cotton futures trading increased by 78% over the same period last year, much higher than the 27% increase in the number of natural clients involved in the same period; the average daily positions of legal customers were nearly 100 thousand, an increase of 84% over the same period; the cotton spot price trend was convergent, and the cotton price difference between China and the United States decreased significantly, from a maximum of more than 6000 yuan per ton to about 2000 yuan, and the discovery function of cotton futures prices gradually recovered.

According to the data of China Futures Association, there are 20 risk subsidiaries in more than 150 Futures Company in China. Recently, 4 new approvals have been set up, and 20 new ones will be added next. Futures Company's subordinate risk management subsidiary has become an important platform for its innovation and development, and a powerful tool for serving spot enterprises and real economy.

Of course, although the cotton futures market should be well utilized, we must guard against risks.

Wang Xiaobing, deputy director of the Department of market and economic information of the Ministry of agriculture, cautioned that while further improving the cotton futures trading rules, we must resolutely prevent excessive speculation in the cotton futures market. We should correctly guide cotton growers and cotton enterprises to actively participate in cotton futures trading, and finally complete the reform of cotton target prices and the establishment of a price mechanism in the market.

Cotton futures pfer, options to accelerate the implementation of cotton yarn futures are expected to be listed at the end of the year

It is a breakthrough in the system to start the pilot reform of cotton prices, and its significance lies in making cotton a market type.

Lin Guangmao, chairman of Tianjin's Yi Fu equity investment fund management company, points out that judging whether a futures variety is mature is a sign of whether this variety is gaining international pricing power.

China's cotton production, consumption and import volume are very huge. It should have the pricing power of global cotton.

Before 2011, there was no large-scale purchase and storage of goods, and the marketization of cotton commodities was very high.

At present, the reform of cotton target price policy is beneficial to the maturity of cotton futures market.

The price of any futures commodity should eventually be returned to its spot attributes, and futures price judgment must eventually return to supply and demand and spot trading.

For the future market, how to better serve the cotton market, Liu Zhichao, President of the China Futures Association, said that with the formation of the cotton market bidding mechanism, farmers and agricultural enterprises need more personalized risk management products. Therefore, futures institutions should further understand the needs of different varieties, industries and different types of customers, promote risk management in a targeted manner, and break new paths in the "futures and integration", and gradually become the professional advisers of the risk products in the three rural industries.

At the same time, through the development of OTC commodity trading and other paction modes to serve customers, we should actively take advantage of hedging risks both inside and outside the field, and draw on foreign experience to go deep into agriculture to give full play to their advantages and provide more flexible and professional services.

In addition, we can explore the application of target price insurance.

From the current point of view, the first very practical move is to set up a cotton futures delivery repository in Xinjiang.

Xinjiang is about 3000~5000 km from the mainland's cotton sales area, and the delivery and pportation of Xinjiang's cotton is a long-standing worry for textile enterprises. It is also a major disadvantage for Xinjiang as a cotton producing area.

Xinjiang's cotton production is huge, and there are only about 50 Xinjiang enterprises directly participating in the futures market, and its trading volume is only between 30 thousand ~5 tons, which does not match its cotton production. This seriously restricts the development of Xinjiang's cotton futures trading.

In this regard, the Zhengzhou commodity exchange is accelerating the implementation of the establishment of a cotton futures delivery pfer facility in Xinjiang.

In this regard, Yu Zhanhai, chairman of Xinjiang agricultural group north Jiang Nong Jia Le limited liability company, said: "the establishment of cotton futures pfer will fundamentally solve the problem of Xinjiang cotton futures forming warehouse receipts."

In Xinjiang, the futures pfer warehouse can be formed, and the Xinjiang futures intermediate stock can form a pport of 500 thousand tons per year or more for futures warehouse and single cotton. It can ensure that the Xinjiang pfer warehouse can be pported to the futures delivery warehouse for delivery within 30~40 days.

The second practical measure is to launch cotton yarn futures trading as soon as possible.

Yang Li, general manager of the Chao Ge Textile Group, pointed out that to some extent, some hedging functions of cotton futures can not be fully realized and can not completely avoid the risk of enterprise operation.

Because from the perspective of textile mills, there are basically two ways to cover insurance, one is to buy orders, the other is to buy cotton, and the other is to have long-term cotton spot in two.

But in fact, there is neither the price of forward orders nor the spot price of forward cotton at present, so futures hedging is not easy to do, because the premise of hedging is to lock the price of one side.

Therefore, the futures market of cotton yarn is imperative.

Yang Li further pointed out that, especially for

As far as factories are concerned, cotton yarn futures can buy cotton on cotton futures, cotton yarn is sold on cotton yarn futures, and two varieties operate in two directions, thus revitalize the resources of enterprises.

Moreover, it is more important that cotton yarn sold on cotton futures can not be at risk of default, because as long as the quality meets the requirements, the company can deliver without risk.

In addition, futures as a risk management tool have been online for more than 10 years, but there are also shortcomings. The introduction of options can serve the formation of the cotton market mechanism more scientifically. The cotton option market is also on the line.

Zhang Jiacheng, manager of the headquarters of Yongan futures financial institution, believes that the innovation of futures is mainly about options.

Because options have the nonlinear characteristics that other basic tools do not possess, they can make the price of the whole market more reasonable.

Yao Guang, general manager of Galaxy futures, also pointed out that cotton futures, cotton yarn futures and options should be integrated as soon as possible, and market organizations could choose risk management methods according to their own needs with the full set of things.

And the innovation of the series will depend on the Zhengzhou commodity exchange.

According to the briefing, in order to better coordinate the new cotton price policy, the Zhengzhou commodity exchange will focus on several aspects: first, we should pay close attention to the revision of the futures delivery rules and the standard warehouse receipt management method, and set up a cotton pfer intermediate warehouse in Xinjiang as soon as possible.

Two, on the basis of active preparation and simulation operation, we should further improve the plan and strive to launch the "agricultural product options exchange" as soon as possible.

Three is to improve the cotton industry chain varieties system, meet the needs of enterprises, and strive to promote cotton yarn futures research and development, striving for cotton yarn futures varieties to achieve listing pactions within the year.