Cotton Prices In New Year Focus On Current Cotton Hot Spot Analysis

By August, the new cotton year is coming.

Target price subsidy policy to our country

What changes have taken place in the industry? New flowers in 2015

What is the possible trend of futures and spot market price expectations?

What will be the impact of the number of yarns on the domestic cotton market? The trend of cotton prices in the new year has become the focus of attention.

The International Cotton Advisory Committee (ICAC), Bremen cotton exchange and other international professional institutions, domestic and foreign large cotton merchants, senior domestic enterprises senior representatives gathered together, in-depth analysis of the current hot issues of cotton.

Game on the critical point -- cotton market outlook for the new year

This year is about to end. Cotton enterprises are stepping up efforts to clear up inventory and return funds, and domestic cotton prices have increased.

Will cotton prices continue to slide in the new year, or will there be a rebound? Will there be any reversal in the new year's cotton market after the low and weak position in recent years?

Li Zhenhua, a senior analyst at Zhejiang Huarui information Touchplus information Corp, believes that price is determined by supply and demand from the point of view, and that supply and demand are affected by price.

To analyze the trend of cotton prices in the new year, we need to look at the supply and demand situation of the market.

He suggested that the supply and demand relationship of cotton had been distorted before the policy of purchasing and storage was interfered. After the abolition of the purchase and storage policy, although there was a round of rotation, the actual intervention was very limited, so the demand of the market itself had more obvious impact on the supply and demand mechanism.

The liberalization of purchasing and storage has made the demand open to the market, and the implementation of dumping and storage needs to see the market's "face". However, the policy system of direct subsidy, import, dumping and storage still has a significant impact on supply and demand.

Price declines - planting area to reduce production decline

Cotton prices continue to decline, affecting cotton growers' willingness to plant cotton. In recent years, cotton planting areas in China and the world are decreasing.

The USDA's latest report on supply and demand in August showed that the estimated cotton acreage in the United States was estimated at 8 million 900 thousand acres in August and 9 million acres in July.

According to statistics, the cotton planting area in China was 51 million mu in 2015, down 19% from the previous year.

(including production and Construction Corps) cotton planting area of 33 million mu, down 9.5%, and the mainland dropped 32%.

According to Xiao Yuqing, chairman of Xinjiang Cotton Association and chairman of Xinjiang Cotton Industry Group Co., Ltd., in March, Xinjiang issued a guiding plan to reduce 4 million 665 thousand mu. According to the actual planting area of all cotton, the whole area actually reduced cotton planting area by 4 million 792 thousand and 300 mu, and completed 102.7% of the reduction plan area.

But this year, the overall weather is good, most areas of cotton growth is good, the overall output of cotton in Xinjiang is not expected to decrease in 2015.

Xinjiang Linhua cotton industry Limited by Share Ltd general manager Wang Shengrong introduced, according to the internal investigation of the Lihua cotton industry, this year, the cotton planting area declined by about 10%, the planting cost is slightly lower than last year; this year the overall weather is better than last year, the new cotton listing time or will be early to September 10th, the recent Xinjiang region high temperature has a slight impact on production; cotton farmers still pay more attention to production and clothing.

Despite subsidies, cotton farmers are still reluctant to sell seed cotton below cost. Research shows that most cotton farmers sell their seeds at a psychological price of 7.6 yuan / kg.

According to Li Zhenhua analysis, the target price of 19800 yuan / ton was before the Xinjiang direct subsidy pilot project, while the mainland only subsidized 2000 yuan / ton per ton. After a year of implementation, the effect of policy guidance made the output difference become more obvious.

According to the prediction of relevant agencies, the output of cotton in Xinjiang is estimated at 4 million 70 thousand tons in 2015, and the output of the mainland is expected to be 1 million 440 thousand tons, with a total output of 5 million 510 thousand tons, a decrease of 880 thousand tons, or a reduction of 14% compared with that of 6 million 390 thousand tons in 2014.

The International Cotton Advisory Committee (ICAC) market analysis general manager Andrei Guilchounts analysis believes that due to the fall in global cotton prices in 2014, the planting area declined in 2015, and the yield per unit area has not increased significantly in recent years, so the global output in 2015/2016 is expected to continue to be below 24 million tons.

2015 of the total production decreased in China, India, the United States and Pakistan, with a total decrease of 10%.

High inventory: the global cotton market is still oversupply.

While production is decreasing, global cotton consumption is likely to increase.

Andrei Guilchounts said that in terms of consumption, the proportion of cotton in global textiles continued to decline to around 28% in 2014.

The main pressure comes from the impact of chemical fiber, especially polyester and short.

If the demand for cotton in developed countries continues to increase and the price has a competitive advantage over other fibers, then cotton will be stable in 2015.

On the whole, global cotton consumption in 2015 is expected to increase slightly.

However, due to huge inventory, the global cotton market is still oversupply.

According to Andrei Guilchounts, although the end of 2015 inventory is expected to decrease slightly in addition to China, it depends on how China deals with its huge inventory.

China's cotton reserves remain high, accounting for about 58% of the world's inventory.

He believes that China's huge stock of state reserves will still suppress the international cotton prices and the main cotton producing areas of cotton planting area.

The international cotton price is expected to run at 57~87 cents / lb in 2015.

Li Zhenhua said that according to the recent two years' data of the US Department of agriculture, the supply and demand in the international market outside China is a serious oversupply. China's cotton imports have partially absorbed the surplus. In addition, because of the existence of imported yarn, there is actually one part of China's consumption outside China which is also dependent on China.

As long as the supply and demand relationship outside China is still oversupply, then the international cotton price will be much higher than the domestic cotton price.

At present, the world's largest cotton producer, its output and policy will also have a greater impact on the international cotton market.

According to Manish Daga, general manager of India Cotton Guru, India government has made policy intervention on cotton in recent years, which has a significant impact on India's domestic cotton prices and exports.

India will continue to carry out the minimum cotton protection price in 2015/2016, and India's domestic cotton price is expected to remain stable.

In June 17th, the cabinet Economic Affairs Committee of India approved the lowest seed cotton protection price (MSP) in 2015/2016.

In order to support the price of lint and protect the interests of cotton growers, the protective price of medium cotton and long staple cotton will be increased by 50 rupees / CP, 3750 rupees / CP and 4050 rupees / CP respectively.

India CCI has accumulated 1 million 510 thousand tons in the current year. As of July 28th, it has accumulated 3 million 846 thousand bags and 654 thousand tons, which means that its inventory still needs 856 thousand tons to digest.

However, the purchase and storage of India in the next year is still of great significance for the international cotton price. However, due to the ease of supply and demand relations, the pressure of CCI purchasing and storage will be reduced.

Import yarn impact and chemical fiber substitution -- domestic cotton demand growth is limited.

It is certain that domestic cotton output will decline in the new year.

At the same time, cotton imports are unlikely to grow.

Li Zhenhua said that in recent years, the decisive factor in cotton imports is still policy, and the reduction in the volume of recorded quotas is the main reason leading to the continuous decline of cotton imports in China.

Based on the consideration of new cotton and cotton reserves, the quota will not exceed 1 million tons in the foreseeable new year.

In this case, imported yarn has become an important factor affecting domestic cotton demand.

Zheng Shengwei, manager of Information Department of Huarui information Touchplus information Corp, emphatically analyzed the influence of imported yarn on China's cotton demand.

He believes that imported yarn has entered the Chinese market in recent years, which is both a supplement to resources and an external shock to China's textile industry chain. It has become an integral part of the current market.

Although cotton price difference narrowed at home and abroad in 2015, cotton yarn imports continued to hit a new high. At the same time, the price advantage of imported yarn weakened, and the poor digestion efforts at the lower reaches led to an increase in port stocks. The trend of imported yarn has changed.

Compared with 2014, there has been no major change in the main source countries and major imports of cotton yarn imported from China. However, the proportion of imports to India, Pakistan and Uzbekistan has increased. Another bright spot in this year's import product structure is that the proportion of imports of medium and low cost non Combed Yarns has decreased while the proportion of imported Combed Yarns has increased.

Zheng Shengwei thinks the import of yarn will be high in 2015, and the import volume will be 2 million 200 thousand tons.

Another important factor affecting cotton demand is the substitution of chemical fibers.

Zhang Hongmei, chief designer of Ruyi cotton spinning group in Shandong, said that whether imported cotton or domestic cotton is picked artificially or machine picked cotton, the general quality problem of cotton at present is short staple rate, neps and foreign fiber, which seriously affect the quality of products and therefore can not meet the quality needs of high-end customers.

She believes that the good wearability of cotton fiber determines that it is a necessity in life. Chemical fibers can partly replace cotton fibers, so as to reduce the dependence of textiles on cotton and solve the problems of supply and demand, grain and cotton competition.

According to reports, Ruyi cotton spinning group uses the color masterbatch of the Lenzing Co masterbatch, modal and India Bola viscose to blend with natural fiber cotton (50/50). The products can be widely used in the field of dress and home textiles, especially for underwear, household clothes, bottoming shirts, women's casual shirts and so on.

Once these products are launched, they are welcomed by the market.

In addition, the development of cotton and all kinds of functional fiber blended yarn also meets the consumers' requirements for functional clothing.

Sachin Malik, general manager of India Bola group, analyzed the challenges facing the cotton industry at present.

He believes that from a global perspective, cotton resources are limited.

The uncertainty of cotton prices and downstream demand and production costs are increasing. In addition, China's cotton production is declining, and the impact of imported yarn is serious. Moreover, the bias of national policies is also not conducive to the survival of the spinning enterprises in East China.

He believes that textile enterprises must find alternative ways to replace cotton with other fibers or use blending technology.

From a comprehensive analysis, from the perspective of policy and price impact on supply, cotton production and imports continue to be cut in the new year, and cotton production in the next year is less than demand.

From the point of view of the impact of price on demand, the price of domestic yarn and imported yarn began to be competitive, because the price was at the bottom. The price of viscose began to be higher than that of cotton, and the price itself had a positive effect on demand. Therefore, the overall supply and demand situation of domestic cotton in 2015/2016 is expected to improve.

Some enterprises said that the current cotton prices have basically close to the global cost of planting, far lower than the cost of planting in China, cotton planting area and output have declined rapidly, and cotton consumption is basically stable. The current cotton price is not necessarily the lowest, but it is already the bottom area. The rise is positive, but when it begins to rise is uncertain.

It is estimated that there is a consolidation process in the bottom area. China's huge reserve stock is restricting the rise, and the possibility of "V" type reversal is very small.