Cotton Target Price Subsidy Pilot Brings New Opportunities To Xinjiang Cotton Enterprises

Xinjiang cotton enterprises are now facing major opportunities. Why do we say so?

Under the background of "one belt and one road" opening strategy, giving full play to the advantages of cotton industry resources cluster and promoting the development of cotton related industry in Xinjiang is not only the key carrier to build the core area of the Silk Road Economic Belt, but also an important starting point for the futures industry to serve the real economy and serve the "one belt and one road" opening strategy.

Xinjiang is located in the geographical center of the Eurasian continent. It is a bridgehead opening to the West.

The core area of the economic belt.

The annual output of cotton accounts for over 60% of the whole country. It is not only the most important cotton producing area in China, but also the most important cotton textile production base.

Good policy

Xinjiang cotton enterprises welcome major opportunities

China's cotton industry is undergoing major changes in policy and structural adjustment.

With the launching of the pilot project of cotton target price subsidy in Xinjiang from 2014 to 2015, and the gradual development of the "one belt and one way" strategy, China's cotton industry has opened a new stage of marketization.

"Under the current situation, the development of China's cotton related enterprises is facing new opportunities and challenges. Last year, the second central Xinjiang work symposium made it clear that the development of the textile and garment industry as a strategic move, the implementation of the development of textile and garment industry to promote employment planning, support the development of textile and garment industry.

Since then, the central government and Xinjiang have promulgated a series of ultra conventional policies to support the textile and garment industry, including the establishment of special funds for the development of textile and garment industry, and the VAT paid by Xinjiang textile and garment enterprises are all used to support the development of Xinjiang's textile and garment industry.

The policy combination has brought a sustained good for Xinjiang's cotton industry.

A few days ago, Xiao Yuqing, chairman of Xinjiang cotton industry group, said at the Symposium of Zhengzhou futures market serving the Xinjiang cotton textile industry held in Urumqi under the strategy of "one belt and one road".

The cotton spinning industry is moving faster to the West.

With the spring breeze of "one belt and one road", the investment boom in Xinjiang has already hit, especially in Xinjiang and cotton textile enterprises.

"More importantly, the policy has created a better market environment and industrial ecology for cotton related enterprises in Xinjiang".

A person in charge of Xinjiang cotton enterprise said that the profits of domestic textile enterprises generally increased by 500 - 1000 yuan / ton.

"One belt and one road"

Xinjiang textile industry leveraging "going out"

The positive changes in the market environment and industrial ecology have created opportunities for the development of cotton enterprises. It has also created conditions for more Xinjiang textile enterprises to "go out" to ease overcapacity and promote the development of China's cotton and textile industry.

Five Central Asian countries are adjacent to Xinjiang, and Uzbekistan, Tajikistan and Turkmenistan are rich in cotton resources.

To promote the "going out" of Xinjiang cotton related enterprises and allocate resources rationally in the international market will enable enterprises to gain strong competitive advantages.

It is precisely because of the textile potential of the countries along the belt and road that the large textile group, in addition to its layout in Xinjiang, also links up with all Xinjiang enterprises in the Central Asian, Western Asian and East Asian markets.

"Great potential and bright prospects, but Xinjiang's cotton and cotton textile industry still faces many challenges."

Xiao Yuqing believes that the development of cotton industry in Xinjiang is still facing several major bottlenecks, among which objective factors such as long haul distance, high pportation cost and difficult to export cotton in time are the main reasons for Xinjiang's cotton enterprises to seize the market and sell cotton in time.

It is understood that after the state has stopped purchasing and storing, the cotton sales cycle of Xinjiang's cotton related enterprises has been running throughout the whole year, resulting in the rising cost costs and market changes risks over time. A lot of enterprises have suffered large losses and cotton is unsalable.

At present, Xinjiang's cotton sales are still dominated by traditional spot trade.

In normal years, most cotton needs to pfer to the mainland for sale, which not only increases the cost of the enterprise, but also loses the right to choose and take initiative. Compared with the foreign cotton merchants' import cotton 3 to 6 months' letter of credit, the sales mode is less competitive.

Make good use of futures

Solve Xinjiang cotton business problems

Transportation and pportation are the objective factors faced by Xinjiang cotton enterprises, and the lagging business mode magnifies these difficulties.

At the twelfth Shanghai Forum on derivatives market forum held in Shanghai recently, guests attending the forum held that Xinjiang's development of cotton textile industry has the advantages of time, place, and people.

However, with the increasingly fierce competition in the national cotton textile industry and the increasing price fluctuation of raw materials such as cotton, the healthy development of Xinjiang cotton textile industry also needs to strengthen product innovation and management innovation, and also need to strengthen market risk management.

"Since 2004, cotton futures have played an important role in improving China's cotton yarn market system, improving the price formation mechanism, and promoting industrial development."

Guo Yong, chairman of Jinshi futures, said that the futures market has the characteristics of strong liquidity, market standardization, capital security and high standardization. For cotton companies involved, cotton futures can not only be used to predict the production and sale with their price discovery function, but also can use the futures hedging function to lock in profits and avoid the risk of cotton pportation in the road.

"Using modern trading patterns such as futures and electronic matching to integrate into the high-end market of financial capital is an effective way for Xinjiang cotton companies to avoid market risks."

Guo Yong believes that the overall scale of Xinjiang's cotton related enterprises participating in the Zhengzhou futures market is relatively small. At the same time, the financial credit policy restricts its loan companies to enter the futures market. In addition, Xinjiang's cotton enterprises generally lack the ability to operate the capital market, and there is no rational use of the financial futures market to avoid risks and reduce the market competitiveness.

It is hoped that relevant institutions and exchanges can strengthen policy support and training for Xinjiang cotton related enterprises to participate in the futures market.

Financial strength

Xinjiang cotton enterprises to participate in futures is expected to be supported

As a staple agricultural product, cotton has strong seasonality, high economic value and large amount of acquisition funds.

It is understood that the Agricultural Development Bank of China is the only policy bank specialized in serving the "three rural issues" in China. Under the new situation, it is also actively exploring the preparatory work for carrying out the hedging business of cotton enterprises and serving the development of Xinjiang's cotton textile industry.

"The main business mode of the Agricultural Development Bank has been buying and selling through the spot market, and its business mode is relatively simple.

If the market price rises unilaterally or falls, there is a risk that the way of dealing is simple and thus leads to losses.

With the development of cotton marketization, this risk is increasingly becoming a major factor affecting the development of cotton industry.

Li Huatian, the two deputy general manager of the Agricultural Development Bank of China, said that the cotton prices continued to fall in 2014, which brought great risks to cotton enterprises. Under the market conditions, the influence factors of the cotton market increased, and further improved the credit policy and risk management section, innovating products and financial instruments, and ensuring the safety of credit funds.

Scientific and rational use of futures tools to control scattered market risks and help enterprises to operate steadily is in line with the current background of cotton market development. Supporting cotton enterprises to participate in cotton futures hedging can effectively lock profits and make up for the single business mode of cotton enterprises.

At present, the Agricultural Development Bank has obtained the qualification of futures guarantee deposit.

Last year, the head office of the Agricultural Development Bank issued the "China Agricultural Development Bank futures hedging business management measures", which has been standardized from many aspects such as customer participation in futures hedging, access system, paction capital management, credit supervision and so on.

"The policy conditions for the clients of the agricultural development bank to carry out hedging are already available."

Li Huatian said that under the efforts of Zheng Shang, cotton futures trading rules and systems are increasingly close to the spot market, and the participation of enterprises has improved significantly.

He disclosed that at present, the agricultural issue has worked with the galaxy futures, Wanda futures and merchants futures to jointly carry out the related research work on hedging. At present, starting with the cotton futures, we will open the hedging pilot and step by step on the enterprises that have strong anti risk ability and have some experience and understanding in the futures market.

"In the future, as cotton yarn futures are listed, both sides of cotton spinning enterprises can achieve hedging at the two ends, which will provide greater freedom for enterprises to use futures tools to carry out risk management, and will also greatly promote the development of domestic textile industry.

The Agricultural Development Bank also wants customers to make good use of futures tools to effectively control risks.

Multiple simultaneous measures

Serving the cotton industry and the policy of "one belt and one road"

Promoting enterprises to participate in the market is on the one hand, how to further build the cotton futures market, and better play the function of cotton futures, is also good service.

The key to the implementation of the "one belt and one road" opening strategy for the cotton industry depends on its implementation.

The function of cotton futures has been brought into full play in the past eleven years.

Under the current policy and market environment, through the careful cultivation of Zheng Shang, the conditions of "hardware and software" for promoting cotton involvement in Xinjiang's cotton market have been improved. Cotton futures have already prepared for the quality service provided by Xinjiang's cotton industry.

Under the "one belt and one way" strategy, the Zhengzhou futures market serves the Xinjiang Cotton Textile Industry Symposium. The director of Zhengshang said that in recent years, in order to promote the cotton futures market to serve the real economy, Zhengshang has relaxed market control, abolished the state-owned cotton related enterprises' application for hedging related systems, cancelled the unreasonable bondage of state-owned cotton enterprises, reduced the cotton grading limit from four to three, expanded the position limit, and facilitated the hedging of enterprises, reduced the futures trading margin of cotton general month and delivery month, and reduced the participation cost of cotton enterprises.

In the field of market maintenance and training, the "three industries" activities were launched to stimulate the enthusiasm of members to serve the cotton industry. Only 1 to May this year, Zheng Shang supported members' units to hold "three industry" activities, including 51 cotton market activities.

In addition, based on the actual situation of Xinjiang's cotton and cotton spinning industry, Zheng business has launched a series of targeted work on the basis of doing a good job in market services.

"In the past, due to concerns about the pportation quality, whether the quality of cotton pported to the mainland's delivery base was up to standard, and whether the price was calculated after the calculation of the premium, the proportion of hedging in the futures market was relatively low.

In view of this situation, through in-depth investigation, Zheng Shang has innovatively designed the delivery pfer plan.

The person in charge said that after in-depth investigation, Zheng Shang designed the delivery pfer plan.

We have set up the intermediate warehouse for interchanges. The cotton production in Xinjiang, Xinjiang inspection and Xinjiang registration, the cotton pfer warehouse receipt delivery unit, the inspection method, the inspection institution, the delivery standard, the time pfer mode, the independent pairing delivery method, the warehouse receipt deposit guarantee, the bank pledge and so on are all the same as the standard warehouse receipt.

If the pfer warehouse receipt is to be converted to standard warehouse receipt, only the problem of pportation from Xinjiang to the mainland will be left. The pport time will be flexibly resolved by the warehouse holder and the delivery pfer bank according to the tightness of railway pportation.

In order to further deepen cooperation with the Xinjiang Autonomous Region Government and related institutions and better serve the Xinjiang cotton industry and the national "one belt and one way" open strategy, Zheng Shang and the Xinjiang autonomous region signed a memorandum of cooperation to jointly cultivate the Xinjiang cotton futures market.

We will focus on training cotton farmers' cooperative organizations and cotton related enterprises within the territory, and guide the cotton enterprises involved in the territory to carry out hedging business.

It is learnt that the next step is to set up a service point in Xinjiang, to coordinate and coordinate the relevant business of Xinjiang cotton futures market and delivery pfer pool.

We will further improve the contract system and rules design of cotton futures, increase investment in education and training for investors in the local market, strive for cotton yarn futures in the year, and improve the futures chain system of cotton industry chain.

The industry will provide full chain risk management services, deepen cooperation with the Xinjiang Autonomous Region government, explore and explore various ways of cooperation, serve Xinjiang's local economic development and the national "one belt and one way" open strategy.