2015 Analysis Of Cotton Market Trend

In the end of 2014, every adjustment of cotton policy fell to dust. old and new policy At the same time, China's cotton industry is undergoing a difficult and painful transformation. Now, in 2015, just now, what changes will be made in the cotton market in the new year? What are the factors that affect the development of the cotton market? Although it has ended in 2014, the time has just passed half of the cotton year. At present, it is hard to conclude the market. In 2015, whether the cotton market continued to fall or whether it was rising steadily, there was still controversy in the industry. But it is undeniable that the oversupply of the world is basically facing tremendous pressure on cotton prices. Insiders said that if the domestic cotton market did not stimulate the policy or the downstream demand had not improved, cotton prices would be difficult to rebound significantly, and the cotton prices going down would continue to affect China's cotton and cotton textile industry.

　　 Policy of cotton market elements

Will not expand the scope of the pilot.

At the 2015 Forum on agriculture, rural areas and farmers held recently, Du Ying, deputy director of the State Council and the national development and Reform Commission, said that in 2014, the target price of cotton will continue to expand in 2015. Du Ying said it did so because the government wanted cotton planting to be concentrated in Xinjiang from the Huang Huai sea area.

The news just verified the industry's previous speculation on the cotton direct subsidy pilot policy. When the news of Cotton Subsidy Policy just came out in 2014, people in the industry speculated that the government's intention was to "abandon the mainland and protect Xinjiang". Although the mainland also introduced a subsidy policy, it will still lose money for the cotton farmers in the mainland. Subsidies are only better than nothing.

Chen Xiwen, deputy director of the State Council Development Research Center, made it clear that under the current international market prices of agricultural products, the mainland is not suitable for producing cotton. He said that the price of the cotton market is expected to be 13500 yuan / ton this year. The main production areas in Xinjiang will be subsidized by the difference between the target price and the actual price, that is, the subsidy per ton is 6300 yuan, and the subsidy per ton in the mainland is 2000 yuan. According to the average 100 kilograms of lint per mu in the middle land, the mainland farmers can get a subsidy of 200 yuan per mu of land, and a loss of 600 yuan per mu. So this year, farmers will naturally choose not to plant cotton, so that cotton prices will gradually recover.

According to this way of thinking, 2015 Cotton market There will be no major changes in the policy. That is to say, the government will not introduce a "rescue market" policy. The cotton farmers in the mainland are still in the state of not making money or losing money. The industry estimates that 2015/2016 cotton annual cotton farmers may gain less income, especially in areas where the dominant cotton species are not obvious in the mainland. This is because the price of cotton in the past is too fast, and it is also the price that must be paid for market reform.

At present, the progress of Xinjiang's target price policy is generally relatively smooth. Market pricing The mechanism has begun to play its role. However, after the implementation of the acquisition, sale and subsidy of cotton in Xinjiang in 2014, the problems of Xinjiang's target price reform also appeared. It is estimated that cotton target price subsidies in Xinjiang will reach more than 250 billion yuan this year. At the same time, 60% of the subsidy will be paid according to the area and 40% according to the sales volume. The verification of cotton area will cost a lot of labor costs, and there will be a risk of corruption when invoicing. In this regard, duying said, Xinjiang Cotton Subsidy operation does exist some problems, such as cotton area verification difficulties, cotton sales volume verification is also difficult. The main reason is that too much land was opened up in Xinjiang, and illegal land reclamation could not be identified. It is more difficult to define illegal and lawful, while subsidy 60% is more complicated according to the area and 40% subsidy method based on the amount of sale. But he said the problem of operation is not difficult to solve. Especially in the new cotton year, the policy will continue to improve.

　　 Supply and demand of cotton market elements

Replenishment of textile enterprises

Power lifting

For 3 consecutive years, the state has implemented the temporary cotton purchase and storage policy, making the domestic cotton prices remain high for a long time. The downstream textile enterprises are in a predicament under the multiple hits of high cotton prices and declining orders. After the implementation of the cotton target price policy, the price of cotton will be determined by market supply and demand, and the difference between domestic and foreign cotton prices will be narrowed gradually, but the demand for cotton has not yet improved.

In 2014, after the implementation of the cotton target price subsidy policy, domestic cotton prices were in the downstream channel, and the depreciation of enterprise inventories was faster. In 2015, did the demand for cotton market improve? The analysis showed that in 2015, the power of replenishment of enterprises increased and market demand increased.

According to historical experience, cotton price fluctuation has obvious cyclical impact on domestic cotton supply and demand, and the stock size of enterprises. The industry expects that with the advent of the historic bottom of cotton prices, the textile industry has the power to purchase additional raw materials. In 2015, the centralized replenishment of the inventory in the lower reaches of the country will drive the recovery of the industrial chain to resume growth and further increase the growth rate of earnings.

However, the huge cotton stocks of state-owned cotton stores have to worry that enterprises are likened to the national cotton store as a time bomb. Once the explosion occurs, the lethality of the textile enterprises will be fatal. At present, the scale of domestic cotton reserves is at about 10000000 tons, which is at a historical level, and the cotton demand in China is between 6 million 500 thousand tons and 7 million 500 thousand tons per year. In 2015, it will be in a state of "supply is obviously greater than demand". But before, the NDRC related personnel clearly stated that only the total sales of new cotton reached 70% to 80%, or if there was a serious shortage of supply or a sharp rise in prices, it would be thrown and stored. Therefore, in terms of supply and demand, the overall position was in a balanced position, of which high-grade cotton had a significant demand gap, which is an important factor supporting the late cotton price.

In addition, the analysis shows that the high cost predicament of cotton textile enterprises since 2010 is expected to begin to reverse in 2015. Since 2010, cotton textile enterprises are facing a rising high cost dilemma. With the natural growth of labor costs, the cost of environmental protection has reached the top, and the prices of major raw materials and cotton have dropped. Cotton textile enterprises are expected to usher in a difficult position in 2015 and enhance their international competitiveness. And experienced early industry integration, small scale, relatively weak business strength of enterprises to withdraw from market competition, industry concentration is expected to enhance overall.

　　 Price of cotton market elements

Fluctuations within a reasonable range

In 2014, the global oversupply of cotton intensified, and the stock consumption ratio continued to climb to a new high. After several years' collection and storage, the first thing facing domestic cotton prices in the market mechanism is the return of value. After the small cotton rose to a high of 93.38 cents / pound in early 2014, the price went down all the way. By the end of the year, the price had dropped to 58 cents / pound, or nearly 40%.

Domestic cotton futures were affected by the downward trend of US cotton, and the policy was changed from purchasing and storage to direct subsidy. Under the suppression of a large number of stocks, domestic cotton prices plunged sharply, from 19000 yuan / ton to 12300 yuan / ton at the beginning of the year, reaching a new low of 5 years. Even if the country does not throw away its reserves before March 2015, and even does not throw new cotton in the whole year, the trend of high and low cotton prices will not change. Even agencies predict that the spot price of cotton will probably fall sharply after the end of the replenishment in 2015, which is likely to fall below the cost price.

Considering that domestic cotton cost support, underpinning policy expectations and the difference between domestic and foreign cotton prices remain at a reasonable interval of 1500 yuan to 2000 yuan / ton, three factors affect the industry. In 2015, the probability of domestic cotton prices will fluctuate at a low level, with a range of 13000 yuan to 13500 yuan / ton, which has basically been relatively stable in the past 2005~2008 years.

For cotton prices in 2015, Du Ying said that we should appropriately increase tolerance for price fluctuations. He said that in the past, we were too sensitive to price fluctuations, and we should set an interval for cotton prices to tolerate fluctuations in the range.