The Characteristics Of Cotton Business Inventory, New Cotton Planting And Production Expectations Are Reflected.

13-14 May 2016, Yongan futures

The industry research team came to Henan on the current cotton business inventories and futures tools.

The production and operation of enterprises, the situation of taking photos, the new cotton planting and production expectations and other issues have visited several leading enterprises in the region. The problems reflected have the following characteristics:

First, the cotton processing enterprises in the mainland almost disappeared, and the elimination rate of textile enterprises was relatively high.

According to the surveyed enterprises, there are dozens of cotton processing enterprises in Henan in 2010 and 2011. With the fall in cotton prices since 2012, the cotton planting area in Nanyang and other areas has been rapidly decaying.

The number of cotton processing enterprises has also decreased rapidly. At present, the remaining processing enterprises are limited to only a small number of parent companies with large assets and strong financial strength, and the equipment is basically vacant. Cotton resources can only be obtained by processing plants purchased or co operated in Xinjiang.

Cotton trade enterprises have been forced to accelerate the pace of pformation in recent years. While continuing the main business of cotton trade, some of the new or new textile mills are engaged in warehousing business, and some can only disappear on the spot.

According to the situation of textile enterprises, when the textile industry was in its prime period in 2010-2011, there were as many as 150 local textile enterprises in Nanyang. With the increase of costs, cotton prices fell, raw materials were far away, exports declined, and the demand for finished products changed and management problems were being solved. There were only more than 10 textile enterprises or small businesses.

The disappearance of plantation land and the disappearance of supply advantages have become the direct culprit of textile enterprises which are out of operation and management factors, and the speed of management strategy and pformation has become the key to the survival and survival of cotton trade and textile enterprises.

Two, business inventories are decreasing and cotton is hard to find.

Nanyang local textile enterprise production and operation director reflects that in order to meet the needs of production, enterprises continue to send people to Henan, Jiangsu, Shandong and other places to find double 28 cotton, but little has been achieved.

According to the reckoning, at present, the commercial inventory in Nanyang is about 15 thousand tons, so it is estimated that the number of commercial stocks in Henan should also be limited.

This situation reflects the inherent reasons for the current high paction rate, high auction price and strong spot price.

In desperation, enterprises can only participate in the auction of state reserves, and the auction situation is not optimistic, mainly reflected in: first, despite the strict control and publicity of the quality index of China cotton reserves, the quality of the cotton producers is not optimistic.

The two is, from filming to cotton to factory time delay.

Three, it is possible to increase the new cost of ppm from the cost of depot storage.

The three is that the dumping and storage pactions and low price expectations are low.

Although most of the companies surveyed have participated in the current auction, the number of single auction companies is limited.

The reason behind the limited number of auction is the high price.

Two is based on the late 6, 7, 8, March off-season orders unstable situation expectations.

Three, concerns about the quality of Resources launched later.

In addition, enterprises hope that in order to resist the impact of imported yarn, it is imperative to lower the price of resources.

In the event that the reserve resources are not limited to 2 million tons, it is already a foregone conclusion. If the management can comply with the requirements of the enterprises and launch the low price auction policy, the impact on the market cotton price is obvious.

Four, the combination of futures and trade makes processing trade enterprises safe from bankruptcy.

From the history of local cotton processing and trading enterprises over the past years, it is timely to adapt to market changes, to accept new things and new challenges, to use futures tools and to correctly use futures tools as a weapon for the survival and development of enterprises.

Since the cotton futures market was launched in 2004, a sample company has been actively engaged in the production of warehouse receipts, warehouse receipt mortgage financing, Interim Cash Transfer and current delivery, with the help of Zheng merchants and the help of Futures Company.

On the contrary, some people who can not accept new ideas and new techniques, dare not try futures hedging tools and use futures tools correctly, do not appear benign development, or even disappear into invisibly.

Enterprises reflect that the reduction of local cotton resources in the future has become an obstacle to their use of futures tools. The reality of Xinjiang's outflow of resources has forced enterprises to speed up the planning of resource layout in Xinjiang and the preparation of registered warehouse receipts in Xinjiang.

Five, the supply of cotton is clear, and the key to market judgement is consumption.

From field understanding and related statistical data, there are few commercial inventories at present. The inventory of enterprises is about to meet one month's production. In the 6, 7 and 8 March, the quantity plan and attitude of supply and storage mainly depend on dumping and storage.

The variables that affect prices are still in demand.

According to the data released in April, domestic demand and external demand have no bright spot or even decline, which is slightly different from the situation reflected by the surveyed enterprises. This is related to the quality of the samples selected by our research and is reasonable.

According to the April statistics and business expectations, the textile production in the 6, 7 and 8 March will have a greater impact on the cotton price trend in the off-season.

{page_break}

Six, the forecast of Xinjiang cotton output is optimistic in the new year, and the output of new cotton will be flat throughout the whole year.

According to the source analysis of the enterprises surveyed from their own sources, the new cotton planting area of Xinjiang production area and autonomous region cotton production area has declined a little, about 4-5%.

The reason why the planting area is not expected to fall is: first, cotton target price subsidy is a local income item that can be realized in Xinjiang. Other crops can hardly enjoy this subsidy, and even reduce the possibility of adding other crops to cotton.

Two, due to the decline in the planting area and long-term decline in cotton prices, the competitive advantage of Xinjiang cotton is beginning to show that cotton prices are rising and the planting area of Xinjiang cotton will be expanded.

Although some cotton planting areas suffered rain in the early days, the characteristics of Xinjiang's rain were not determined. The replanting would make up for the shortage of seedlings in some areas.

In addition, it is predicted that the climate of Xinjiang will benefit the growth of cotton and the possibility of increasing yield per unit area this year.

Therefore, it is estimated that the output of Xinjiang cotton will remain at last year's level in the new year.

The situation in the mainland is that the total production is expected to remain at the 900 thousand tonne level under the basic situation of reducing the area.

Seven, the cotton price trend has an increasing influence factor, which increases the difficulty of avoiding risks for industrial enterprises.

The sudden surge in the early stage has made industrial enterprises suffer from varying degrees of losses depending on the fundamentals of their hedging and other positions.

Off site funds quickly leave the field after rapidly capturing the original funds in the field, creating difficulties for the healthy operation of the market in the future.

Reflecting on the situation of industrial enterprises in this soaring market, the sample enterprises generally have the following experience. First, under certain circumstances, fundamentals do not absolutely dominate the direction of price fluctuation.

Two, macro factor analysis has become a necessary course for industrial enterprises to take refuge in risk investment.

Three, we should pay attention to the change of capital tendency and market sentiment.

Four, the new investment methods must be used for reference, such as price difference research, relative price analysis, combination of current and futures, arbitrage operation method and so on promoted by Yongan futures.