What Is The Impact Of Central Document No.1 On The Cotton Industry?

In February 1st, the Central Committee of the Communist Party of China and the State Council recently issued several opinions on increasing reform and innovation and speeding up agricultural modernization.

The contents include: 1.

The management of import and export and tariff quota of important agricultural products such as sugar is strictly enforced.

We must crack down on the smuggling of agricultural products. 2, summarize the pilot experience of Xinjiang cotton, northeast and Inner Mongolia soybean target price reform, improve subsidies, reduce operating costs, and ensure timely and full realization of subsidy funds to farmers.

We will actively launch a pilot scheme for price insurance of agricultural products.

We should rationally determine the reserve scale of important agricultural products such as grain, cotton, sugar and meat.

And domestic cotton, cotton enterprises and foreign concerns focus on whether the cotton direct subsidy policy is adjusted in 2015, whether the national cotton reserves will be re exported after March 2015 and 2015, in addition to the 894 thousand tonnes of the 1% tariff, whether the cotton imports should be added to the cotton tariff quotas or not.

The author believes that "Central Document No. 1" is an outline document. Although it is aimed at the modernization of the whole countryside, cotton, cotton growers and cotton industry as an important pillar of the rural economy (especially the Xinjiang cotton region), as a part of the modernization drive, occupies an important position in the document.

At present, the scale of state cotton storage is in a "non rational" state, but the probability of sale of State Cotton stores in 2015 is not great.

First of all, according to the current consumption ability of the textile industry, most of the market thinks that China's cotton consumption capacity in 2014/15 will be less than 7 million 500 thousand tons (some radical research institutions think less than 6 million tons), while the national storage cotton store has more than 10 million tons, and the inventory consumption ratio is close to 150%.

Secondly, the relevant state departments have made it clear that unless the domestic cotton supply is tight, cotton prices will rise sharply, otherwise they will not go abroad to store cotton in principle. Some cotton traders and agencies believe that the cost of picking 3128 cotton in Xinjiang is above 14000 yuan / ton. Before the Spring Festival, the cotton market will enter the stage of "trading stalemate and hard stabilization", so the price of Xinjiang cotton in 2015 is less than 15000 yuan / ton, and the possibility of state-owned cotton spinning is very small. When the spot price of cotton is higher than 15500 yuan / ton or even 16000 yuan / ton, even if the state turns out the reserve cotton, its price will not be too low.

In addition, from the feedback of the current market parties, the sharp decline of cotton planting area in 2015 seems to be a foregone conclusion. In order to stabilize the cotton planting area and compete for pricing power, there is little hope of going abroad for cotton storage in the short term.

Cotton import slip tariff increase or luxury, but India, Pakistan, West Africa and other low grade cotton or down 60 or 58 cents / pound, to Chinese buyers to pay the 40% full customs clearance of the opportunity.

The responsible person of the national development and Reform Commission said that in addition to adding 894 thousand tons of WTO tariff and 1% additional cotton imports to the company, the import quota would not be issued in principle in 2015.

There is no so-called "quasi sliding tax policy" for cotton production without the issuance of quasi tax quotas. The focus of the government has shifted towards cracking down on smuggling of foreign cotton.

Considering that India's national reserves are all "one year and one clear", it is not the next year. Therefore, in the case of India's CCI (Cotton Corp) throwing and storing, it is an inevitable choice to lower the bid price.

Because of the impact of the new cotton on 2014/15 and the drop in reserve price to the spot market, it can be imagined that the CIF ex factory price of India cotton will be lowered by 8 cents per pound (1-2 cents on February, India cotton S-6 1 5/32 offers 69.5-70 cents / pound). There will be a certain amount of India cotton to enter the Chinese market through full tariff clearance.

A foreign businessman said that in early February, the the Yellow River River Basin real estate cotton grade 3128 delivery price was 12500-12800 yuan / ton, while the India cotton CIF quoted 58 cents / pound, 40% yuan under the tariff net weight 12500 yuan / ton, 60 cents / pound customs clearance under the customs clearance price is 13000 yuan / ton.

2014

There are some problems in the pilot project of Cotton Subsidy. From the change of the green box and yellow box policy, it will take a long time to digest from farmers to government departments at all levels to cotton enterprises.

It is understood that the first cotton target price subsidy in Akesu area is 954 million yuan, the direct subsidy area is 4 million 990 thousand mu, the second batch of cotton target price subsidy fund is 831 million yuan, but the second planting subsidy area is 7 million 960 thousand mu.

Some farmers believe that the amount of direct subsidy in 2014 is lower than expected, and the area subsidy is late. They should be distributed in advance to August. The division of interests between the land owners and the actual growers should be more clear. The procedures should be pparent and fair, and production subsidies can be postponed until the end of February next year.

In addition, because the target price subsidy in 2014 is 19800 yuan / ton, the market thinks that the subsidy in 2015 will be below 19800 yuan / ton (the spot price is only about 14000 yuan / ton). How to ensure and satisfy the farmers' income? How to prevent the farmers in Xinjiang in 2016 and 2016 not give up planting cotton is the fundamental policy implementation.