Silver And Cotton Industry "Futures + Order" Mode To Hedge The Risk Of Cotton Price Fluctuation

In Zhengdian's "point base" demonstration enterprise, the Hubei Baiyin cotton group started from the spot operation of cotton, and made use of futures tools to create the "silver model" of the "company + base + professional cooperative + cotton farmers" and "futures + orders" industrial mode, which became a classic case of cotton futures companies in Zhengzhou Institute of Commerce.

Li Chun, general manager of agricultural products division of Hubei Baiyin cotton industry group, said that the function of futures market is to avoid risks, find prices and venture capital, and effectively use cotton futures as a risk management tool to hedge operations, which can help enterprises effectively avoid risks, control costs and lock in profits.

Enterprises can make full use of the futures market to make price management, guide acquisition and sales with competitive prices, achieve intertemporal arbitrage to achieve stable returns, establish virtual inventory of enterprises, hedge the risk of rising seed cotton prices, and also achieve inventory hedging.

The silver cotton industry entered Zheng Shang's futures trading in 2004, based on the cotton spot purchase and processing, mainly engaged in cotton hedging operation, focused on the sale of cotton value, and played a very big role in controlling the risk in the process of development, especially in 2010 and 2014.

In the year, the loss of the lint price of the acquisition and processing was greatly reduced. Zheng cotton futures escorted the silver group's sound, sustained and rapid development.

For example, in 2011, the silver cotton industry signed 3000 tons of cotton futures contracts through cooperatives and farmers.

The purchase price is between 6 yuan / Jin - 6.5 yuan / Jin, the average purchase price is 6.3 yuan / Jin, which is 1.8 yuan -2 yuan / Jin higher than the market price of seed cotton listed in September, helping farmers effectively avoid the risk of falling seed cotton prices and promoting stable production and income of farmers.

2014 the purchase price of cotton seed cotton is 3.5 yuan / kg, higher than the average price of 0.4 yuan ~0.5 yuan last year, which plays a great role in increasing cotton farmers' income.

Li Chun also introduced.

The feeling of participating in futures.

He said that enterprises must carry out in-depth and detailed research and analysis of cotton market before they are insured, grasp the trend of cotton market, and establish a complete and effective risk control system. This is the first important thing.

But at the same time, he reminded cotton companies to take part in futures to overcome the idea of profiteering. Hedging is the most important way to make use of futures. Moreover, the purpose of enterprises' participation in futures markets is to avoid the risk of market price fluctuations rather than blindly chase high returns, so it is not necessary to make speculative business in the course of operation.

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With the coming of mid May, the discussion on the trend of cotton has increased again, especially in recent years, and speculation about the dumping and storage has brought some uncertainties to the stable cotton prices.

How will the cotton market run in late May and even June?

What will be the effect of dumping? These days, more and more information about dumping and storage is heard, and we hear more and more confusion.

Dumping and storage are highly policy oriented and uncertain. Any speculation without sources is undesirable, especially when to throw, throw and price.

Therefore, the author thinks that some problems about throwing and storing can be considered more often.

It needs to be emphasized that many industries worry that throwing reserves will break the current cotton supply and demand pattern, which I think is certain.

But this can not be equated with changes in supply and demand, and prices will fall.

Just imagine, if the national cotton price is set at 15000 yuan / ton, do you think the current price is "hit down" or "pull up"? Therefore, sometimes we worry too much about some vague things.

Up to now, how much is the resources of Xinjiang cotton? According to the national cotton market monitoring system data, the total output of cotton in the whole country is about 6 million 510 thousand tons this year. Judging from the number of lint processed, publicly checked and warehousing, the total output of cotton in Xinjiang in 2014/15 is not less than 4 million 400 thousand tons.

As of mid May, the sales of cotton in Xinjiang had been completed by about 65%, that is to say, the commercial inventory of Xinjiang cotton was less than 440 * 0.35=154 million tons.

What's more, we need to pay attention to that the sale of hand picked cotton in Xinjiang this year is very fast. At present, it is difficult to find it in the market. Most of the rest are hand picked cotton and medium and low quality hand picked cotton.