Cotton Price Volatility: When Will Policy Concentrate And Stabilize?

Affected by supply and demand and many factors, since 2009/2010

Expansion of production demand gap

Cotton market this year presents the following four characteristics.

First, the gap between production and demand is 5 million 200 thousand tons, and the gap rate is around 45%.

2003/2004 cotton production 4 million 860 thousand tons, compared with the 6 million 250 thousand tons of consumer demand in that year, a gap of 1 million 390 thousand tons, and the gap between production and demand 22.2%, causing cotton prices to skyrocket.

As the late expansion of cotton imports (the import of 1 million 979 thousand tons in that year), supply and demand gradually balanced, cotton prices began to decline after May.

Cotton production in this year (2009/2010) is 6 million 400 thousand tons (statistical bulletin data), a decrease of 1 million 100 thousand tons compared with the previous year, a decrease of 14.7%. It is expected to consume 11 million 600 thousand ~1190 million tons in the whole year, and the gap between production and demand is more than 5 million 200 thousand tons, and the gap rate is about 45%.

Second, cotton imports dropped by 2008/2009 million tons in recent years, and the gap was pferred to this year.

In 2008/2009, cotton production in China was 7 million 500 thousand tons, which was basically the same as that in 2007/2008; imports of 1 million 446 thousand tons, a decrease of 40.7% million tons compared with that in 2007/2008, and the estimated consumption of spinning cotton resources is about 10 million 860 thousand tons, and the resource gap is about 1 million 900 thousand tons.

Because of the sharp decline in cotton imports in the year, the gap was partly pferred to 2009/2010, resulting in intensified resource tension this year.

Third, as of May, cotton consumption exceeded 900 thousand tons, and resources were scarce.

According to the National Bureau of statistics, by the end of May 2010, the total output of yarn was 19 million 200 thousand tons. According to the estimate, 9 million 200 thousand tons of cotton had been consumed, although the total annual import volume was 1 million 919 thousand tons, an increase of 85% over the previous year, which is 32.7% higher than that of the previous year. However, it is still difficult to make up for the shortfall.

Fourth, 3 months after 2009/2010, cotton spinning needs 2 million 400 thousand ~270 tons, and resources are nowhere to be found.

According to the average monthly consumption of 800 thousand ~90 million tons, 3 months after this year, 2 million 400 thousand ~270 million tons of cotton need to be spun.

Although the management issued 800 thousand tons of cotton import quotas in May, it is far from enough.

To sum up,

expect

This year's cotton market is so complex and unexpected that it also shows the lag and inefficiency of the macro-control measures.

As early as the first wave of cotton prices surged in 10~11 months in 2009, the state actively adopted a throw in reserve to curb cotton prices, and issued a cotton import quota ahead of time in December to enhance people's confidence in stabilizing the cotton market this year.

However, in the course of several successive wave of soaring prices, especially after March 2010, when the venture capital intervened in speculation, cotton merchants sold hoarding cotton, and textile enterprises bought cotton very hard, the measures to curb the soaring cotton prices had not yet been introduced, which led to the increasingly complex cotton market and could not make accurate judgement and forecast of the future market.

Fortunately, the price of cotton yarn increased faster than cotton in 2010, and the sales situation was better.

But cotton resources have been reduced, procurement has no channels and resources have not been completed.

It is understood that some enterprises to complete the order, looking for cotton everywhere, and even at 2000 yuan per ton to buy Cotton quotas in the market.

According to some enterprises, because cotton prices and cotton yarn prices in 2010 changed too fast, they could not organize the production and operation of enterprises.

In order to meet the production needs of enterprises, some cotton spinning enterprises consider purchasing 200 type cotton processing enterprises, so as to acquire, process and produce 1 dragons.

Conditional enterprises should consider directly signing production and sale agreements with cotton growers and take the road of integration of agriculture and industry.

Some needles and cotton enterprises are also considering building their own textile factories to meet their own demand for yarn.

All kinds of ideas are caused by the confusion of cotton market in 2010.

In order to stabilize the cotton market and meet the production needs of enterprises, macro-control measures should be launched in a timely manner. If the resources are not sufficient, the import quota should be given more or even the quota system should be abolished, so that enterprises can choose to purchase cotton in the international market. This is one of the most effective measures to stabilize the market at present.