Cotton Prices Will Eventually Return To Market Orientation

Cotton main 1405 contract from November last year cotton The lowest price at the time of listing was 18310 yuan / ton, rising to the highest price in the first ten days of February this year, 20245 yuan / ton, or 10.5%. It is unthinkable that prices have risen so much during the harvest season where cotton is extremely loose. Since mid February, the price of cotton 1405 has fallen from 20245 yuan to the highest price of 18500 yuan / ton, basically returning to the starting point of last November. The main reason for the two day market of cotton is the change of cotton purchasing and storage policy. In fact, in the past three years, the cotton price has been fluctuating for 18300 to 22000 yuan / ton for a long time, which is more of a policy oriented rather than a market-oriented one.

　 Price subsidies under purchase and storage mode

Cotton purchase and storage in September 2011 policy At the end of this year, it is undoubtedly a victory of the market economy. It is undeniable that the temporary purchasing and storage policy has played an important role in protecting the interests of cotton farmers and stabilizing the market. However, the benefits of policy purchasing and storage have not completely fallen on cotton farmers. Because in addition to high storage costs and class losses, a large subsidy went indirectly to the United States on the other side of the ocean.

The United States exports cotton to China every year, accounting for about 30% of the total cotton imports in China. Because the proportion of import quotas issued by 3:1 has been implemented in China, that is, cotton textile enterprises must purchase 3 tons of domestic cotton to obtain 1 tons of imported cotton quotas. This actually limits the number of cotton imported from abroad (including the United States), which leads to price cuts or raise prices for cotton farmers in the United States. (of course, no price increases can be made, otherwise Chinese buyers will not have quotas). Chinese buyers have only so many quotas to buy. Therefore, the US cotton growers have no intention of reducing sales promotion, so that the price of the US cotton that should have been depreciated is affected by the policy of China's purchasing and storage, and it maintains the basic fixed price difference between China's high and low cotton price of 4000 yuan to 5000 yuan per ton, which indirectly enjoys China's cotton purchase and storage subsidy.

This year, China will implement direct subsidy policy in the largest cotton producing area in Xinjiang, which means that the national cotton purchase policy is about to complete its historical mission, and the domestic cotton price policy premium will no longer exist. It is expected that this policy will be implemented throughout the country next year. Direct subsidy policy will promote cotton prices from policy oriented to market regulation. On the one hand, reducing intermediate links directly protects cotton farmers' interests; on the other hand, promoting the marketization of cotton prices, domestic cotton prices will gradually link up with international cotton prices, solve the problem of excessive cotton prices both inside and outside the country, and make reasonable cost return. Spin The competitiveness of export enterprises has picked up. Cotton futures market will also be favored by the insurers and speculators again.

Adjustment of reserve cotton sales policy

In March 24th, the China Cotton Association announced that in order to ensure the demand of cotton textile enterprises, the relevant departments decided to adjust the policy of reserve cotton from April 1st. The bid price of standard class will be adjusted from 18000 yuan / ton to 17250 yuan / ton, and the concrete plan has been announced recently. Obviously, the purpose of adjusting the reserve cotton sale policy is to speed up the de stocking. Compared with the price of cotton in the international market, the dumping price of 18000 yuan / ton in China has been very high, and the downstream textile enterprises can not accept it. This has caused substantial damage to the international competitiveness of domestic textile enterprises, because the raw material cost of foreign cotton textile enterprises is also 13000 - 16000 yuan / ton. When the benchmark price of throwing and storing cotton fell to 17250 yuan / ton in April 1st, if the import quota was tied up in a certain proportion, the actual cost of throwing and storing cotton was only around 16500 yuan / ton. The reduction of the base price of cotton reserves will enhance the enthusiasm of cotton enterprises to auction in a certain extent.

However, considering cotton Stock Large domestic cotton market has to go through inventory for a long time. In the process, cotton prices will be suppressed, and the possibility of a sharp rise is unlikely. It is understood that from April 1st onwards, cotton textile enterprises to buy 4 tons of domestic cotton in order to obtain 1 tons of import quotas. Therefore, the forecast of 16000 yuan / ton is the national reserve reserve price, and the cotton price will return to market orientation.