What Is The Trend Of Cotton Prices In 2016?

It's the beginning of the year. Cotton spinning The industry has begun a heated discussion on the factors affecting the operation of the industry in the new year. cotton How will prices change and when will the State Cotton store go out? Xinjiang The impact of cotton textile production capacity on the mainland's spinning enterprises has become the most concerned topic in the industry chain. In order to get a more detailed understanding of the development direction of the cotton textile industry in the new year, this edition launched a series of reports on "2016 concerns about the operational factors affecting the cotton textile industry" this period. It analyzed the development environment of the industry in 2016 from three aspects: cotton prices, domestic cotton market stocks, and Xinjiang cotton and cotton yarn production capacity.

After the implementation of the reform of cotton policy, in early 2015, the industry's confidence in the operation of the industry increased greatly. It was thought that although there would be a rather difficult transition period, the operation of the industry would certainly become better and better. Now that 2015 has just passed, the reporter found in the interview that the transition period is obviously worse than the enterprise expected. Enterprises generally say that business operations in 2015 are more difficult than in 2014, and the important factor is the impact of cotton prices. In addition to the downward pressure on the economic environment and the downstream demand, the downward trend of cotton prices has made the order loss of cotton textile enterprises serious, and even the phenomenon of "one single, one loss" has caused enterprises to complain incessantly.

In 2016, the cotton textile industry is still affected by many factors, such as quality and price. In the case of cotton production reduction, policy optimization and market price mechanism becoming more mature, will China's cotton price be able to see bottom in 2016? Will the operation of the cotton textile industry turn a favourable turn?

　　 Cotton demand has not improved

For a long time, China's cotton price is the most helpless part of the cotton textile industry chain. In the era of cotton purchase and storage, the price of cotton is determined by the state, but relatively speaking, the price is stable. After the implementation of the cotton policy reform, cotton prices have been gradually marketed and gradually integrated with the international market, and cotton prices are in a downward trend. The instability of cotton prices and the spread of cotton prices at home and abroad have led to a significant reduction in cotton consumption in China.

During the "12th Five-Year" period, China's cotton fiber consumption has been declining, from 12 million tons per year to 7 million tons in previous years, and according to the prediction of relevant agencies, the consumption of cotton fiber will still drop to about 6 million 500 thousand tons in 2016. At the same time, the substitution of chemical fibers and other fibers to cotton fibers is constantly increasing, and many cotton textile enterprises tend to produce blended yarns.

Li Nan, general manager of Louis Dreyfus Corporation, said: "in fact, China does not use cotton in large quantities, but rather uses other people's cotton. Although China's cotton consumption is declining, if the amount of imported yarn is calculated, the amount of cotton used in China will not decrease significantly.

In January, the International Cotton Advisory Committee predicted that in the year of 2015/2016, under the influence of low international cotton prices, the cotton production in China and the southern hemisphere would be cut down. It is estimated that the global cotton output will be reduced to 24 million 550 thousand tons, a decrease of 5.9% compared with the same period last year, and consumption of 24 million 670 thousand tons, up 1.1% from the same period last year. The global cotton ending stock will be reduced to 21 million 130 thousand tons as the volume of consumption exceeds production. That is to say, from a global perspective, the supply and demand of cotton market is basically balanced. At present, great changes have taken place in the international cotton market. After 5 years of growth in global cotton stocks, there has been a reverse trend. Only China is still in a situation of oversupply.

How can we improve the consumption of cotton fiber in China? Li Nan pointed out that the solution to China's cotton problem is to expand consumption. At present, there are quite a few cotton consumption in China, but many domestic enterprises use many foreign cotton. Only when domestic cotton consumption is increased, can cotton reserves have a way out.

　　 Supply of market resources is too large.

Another important factor that has caused tremendous pressure on cotton prices in China is China's huge cotton stocks. The supply of cotton in China is much larger than that of cotton. Under such circumstances, it is very difficult for cotton prices to be bottomed out.

In 2014, the total supply of cotton in China was about 20 million 800 thousand tons, and consumption was about 7 million 200 thousand tons. The supply was obviously oversupplied and the stock accumulated 14 million 800 thousand tons. In 2015, the supply declined to 20 million 100 thousand tons due to the decline in production, and the demand dropped to 7 million 130 thousand tons, and the stock dropped to 14 million 170 thousand tons, but it remained at a high level. Among them, supply includes state-owned cotton, new cotton, imported cotton, and carry over stock in the hands of enterprises. As of the end of 2015, the national cotton stocks remained at about 12 million tons. For the current cotton inventory in China, the relevant personage said, according to the current level of cotton consumption in China, even if cotton farmers do not grow cotton and spin enterprises do not import cotton, 12 million tons of national cotton will need to be consumed for at least two years. It can be said that at present, the impact of such a huge inventory on cotton prices can only be one word, down!

According to the data released by the National Bureau of statistics, in 2015, the cotton planting area in China was 3 million 799 thousand hectares, a decrease of 423 thousand and 400 hectares compared with 2014, and a decrease of 10%. The total output of cotton in China is 5 million 605 thousand tons, 574 thousand tons less than in 2014, and a 9.3% reduction in output. Earlier, the responsible person of the NDRC said that in 2016, it continued to strictly control the import of cotton, and the import quotas within the tariff were still limited to the bottom line of WTO at the level of 894 thousand tons. That is to say, in 2015/2016, cotton used by cotton textile enterprises in China is at least 18 million tons, about 3 times the annual consumption of cotton in China.

Therefore, a number of textile enterprises responsible person said that in 2016, the price of our national cotton reserves will be lower than before, and even lead to a new fall in cotton prices in China. In 2016, the turn out time of cotton reserves has always been the focus of the industry. At present, the industry's news about the storage of cotton wheels continues. The mainstream view is that the launch will start in March 2016, and in the recently held China Cotton elite forum, the business representatives generally agreed that it would be suitable for rotation from June 2016 to August. According to past experience, it usually takes 7~8 months. At this point, for cotton farmers, the new cotton is basically sold out; for cotton enterprises, the new cotton sales work is in the late stage, and the remaining lint is limited, which has little impact on the whole market; for textile enterprises, there is limited choice for the market lint resources.

　　 Different grades of cotton price difference widened

The cotton market is still in excess of demand, and the price of cotton will remain weak. For the cotton prices in 2016, the industry has seen a more prominent impact from structural contradictions besides low prices. The industry generally believes that the purchase and sale of high and low cotton and the price gap will further widen.

Especially in September 2015, Xinjiang suffered two large range of cooling and precipitation weather, which had a great impact on cotton quality. The data of cotton inspection were different from previous years, causing the gap of high-grade cotton in China to expand. Therefore, many cotton textile enterprises are worried that the shortage of high-grade cotton will become more serious in 2015/2016, which will further widen the spread of high-grade cotton in China.

According to cotton analysts, the total domestic demand for cotton is only about 7 million tons in terms of production and demand this year, and the supply of new cotton with 5 million 300 thousand tons and the import quota of 894 thousand tons still have a shortfall of about 900 thousand tons. The high temperature of more than 20 days from July to August last year affected the quality of new cotton, and the problems such as short fiber and high horse value resulted in less than 40% of high-grade cotton and high quality cotton. Therefore, the personage thinks, do not rule out at the recent stage of the new cotton market after the concentration period, with the reduction of cotton source, before the national cotton sale, the high grade cotton market price has certain rebound space, but still will not go up.

China's cotton policy shows that the country's willingness to go out of stock is increasing. That is to say, the reduction of cotton acreage has led to a decline in supply year by year. The price of cotton will be lower and lower, and the cost of planting and harvesting of cotton growers is very high. At the same time, the contradiction between output, quality and benefit imbalance will be further highlighted. Although the state has implemented the Xinjiang direct subsidy scheme and the mainland's quota subsidy policy, cotton growers' enthusiasm for planting can hardly be promoted in the short term. It is estimated that the planting area of each cotton area will still fall to varying degrees in 2016.

In 2015/2016, the supply and demand relationship of cotton market in China has improved, and cotton has entered the inventory cycle as a whole. It takes time to improve cotton demand. For the cotton price in 2016, Wu Faxin, chairman of Shanghai yarn & amp; Co. Ltd., said, "domestic cotton prices will not rise, and foreign cotton prices will not fall." He said many domestic owners set up factories overseas. The most common phenomenon is that China's cotton mill enterprises and cotton yarn traders go abroad to buy Australian cotton or American cotton and transport them to Hu Zhiming, Vietnam, after spinning cotton yarn into Shanghai, Qingdao, or other countries for weaving. As a result, problems such as quotas, labour and tariffs can be solved. It can be expected that these overseas factories will become the main force of foreign cotton procurement. Therefore, the price of foreign cotton will be limited because of the support of demand.