Cotton Market Will Help Xinjiang Tackle Poverty

Jiang Pingan, vice chairman of the CPPCC National Committee and vice president of Xinjiang Agricultural University, recently told reporters in the gap between the two sessions of the National Committee that cotton futures played a beneficial role in serving the economy of Xinjiang region. It is suggested that more distinctive futures varieties be timely introduced to serve the development of China's cotton industry and special forest and fruit industry and serve Xinjiang's poverty relief efforts.

Jiang Pingan said that since the listing of cotton futures in June 2004, the market function has been highly effective, and has played a role in helping China's cotton industry policy implementation and promoting the healthy development of the cotton industry.

First of all, cotton futures have good liquidity and accurate price discovery.

Since the reform of cotton price target, cotton futures have been actively traded, creating favorable conditions for the price discovery function.

The price trend of cotton futures has always maintained a high correlation with domestic spot prices, and the current price correlation in 2016 is 0.93.

It provides a powerful tool.

Secondly, we should further consolidate the advantages of Xinjiang's main producing areas and serve the implementation of China's cotton industry development strategy.

In the strategic deployment of China's cotton industry, cotton futures played an active role, not only facilitating the use of futures tools in Xinjiang cotton production institutions, stabilizing cotton farmers' income, but also consolidating the main cotton producing areas in Xinjiang.

After the listing of cotton futures, Xinjiang cotton set up a premium, reflecting the quality advantages of Xinjiang cotton, so that Xinjiang cotton sold a good price in the futures market.

In addition, in line with the development trend of the cotton industry, Zhengshang will open the Xinjiang cotton delivery warehouse in September 19, 2017, adjust the cotton futures benchmark price area to Xinjiang, highlight the Xinjiang cotton price benchmarking role, and speed up the pfer of cotton industry to Xinjiang.

Thirdly, accurately reflect the market changes and help the structural reform of the supply side of cotton industry.

In the process of cotton target price reform, cotton futures reflect the effect of policy implementation quickly, which provides an effective basis for adjusting relevant policies.

When cotton target price reform started in 2014, cotton futures prices began to decline steadily, reflecting the policy orientation of China's cotton prices returning to market.

In 2016, when the national cotton store went out of stock, there was a problem.

The futures market is keen to capture relevant information and price rises, which provides signals for relevant government departments to identify problems.

Fourth, launch the pilot of "insurance + futures" to serve the reform of cotton target price.

In 2016, Central Document No. 1 clearly stated that we should improve the agricultural insurance system and carry out the trial of "insurance + futures".

The 6 "insurance + futures" pilot projects on cotton varieties cover Xinjiang, Gansu, Shandong, Hunan, Hubei and other major cotton producing provinces (regions), involving 4 counties with key poverty alleviation efforts.

Through a pilot project, we have explored a new way to protect cotton farmers' income through futures market. This is a useful supplement to the existing cotton target price reform, and can provide reference for the improvement and adjustment of cotton planting subsidy in the next stage.

Fifth, provide risk prevention tools to stabilize business efficiency.

After the cotton futures market, Henan, Shandong, Hebei and Xinjiang cotton main production provinces (regions) enter the futures market hedging enterprises, began in October 2004, according to the national standard processing cotton, registered warehouse receipts, sold a good price in the futures market.

In October 2004, there were only 7 families.

Processing enterprises sell cotton in the futures market. By November 2016, hundreds of enterprises had sold cotton through futures markets, and the selling prices were higher than those in the spot market.

At present, large cotton enterprises generally adopt the pricing model based on cotton futures price plus a certain premium, which has better stabilized the operation.

Sixth, protect the interests of cotton farmers and stabilize the income of cotton farmers.

Since 2007, as cotton growers have increased their acceptance of cotton futures, cotton growers will choose cotton seed futures to sell seed cotton on the basis of cotton futures contracts in October.

Cotton futures have greatly increased the pparency of price information, reduced the phenomenon of low cotton farmers' sales, and stabilized the income of cotton farmers.

Jiang Pingan suggested that on the basis of summing up the experience of cotton futures market operation, we should continue to introduce more new futures varieties, and actively discuss the Xinjiang jujube futures and cotton options listed, and serve Xinjiang to tackle poverty.

For example, jujube is an important cash crop in Xinjiang. Under the guidance of the policy of stabilizing grain and excellent economy, the output of Xinjiang jujube rose rapidly from 120 thousand tons in 2008 to 3 million tons in 2015. It has become a "rich fruit" to promote the increase of farmers' income in Xinjiang, and has gradually developed into a "red economy" which is abreast of cotton's "white economy".

Due to the large fluctuation in price of red dates, farmers and industrial chain enterprises are facing higher risks of planting and operation. In 2016, the price of red dates dropped from 30 yuan / kilogram in previous years to 7 yuan to 8 yuan / kg, which once appeared "difficult to sell dates".

In his view, listed jujube futures not only help to avoid the risk of price fluctuations, but also help farmers to compare their planting benefits, so that they can actively adjust their planting structure and stabilize their income.

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