Cotton Prices "Run Counter To North And South"

Recently, media reports said that in some provinces of the middle and lower reaches of the Yangtze River, such as Hubei and Jiangsu, "drought has a greater impact on rice planting, and some farmers plan to replant cotton." Therefore, the local cotton Planting area is showing an increasing trend and is expected to grow by about 10% this year. However, this reporter learned that the situation is the opposite. According to local farmers, due to drought and concerns about the future floods, and cotton prices after last year's Daniel market has dropped sharply this year, and the high cost of cotton planting and other factors, many farmers have given up planting cotton this year, cotton planting area will be greatly reduced this year. But in some parts of the north, cotton appears. Price Rebound, cotton growers planting enthusiasm signs of improvement. This is just for the downstream industry chain. Cotton price Textile and garment enterprises, which have fallen and failed, bring the hope of reviving the dead.

　　 South tired North vibration

The reporter learned from the China reserve cotton Management Corporation (Central Cotton store) that since mid March, the price of seed cotton has dropped down in the middle and lower reaches of the Yangtze River, and this time coincides with the decisive moment of farmers' decision to cotton planting, which has led to a fall in confidence in cotton planting among farmers.

The information disclosed by the Central Cotton store was confirmed by the local farmers. Mao Hancheng, a farmer in Yancheng, a cotton producing area in Jiangsu Province, told reporters that because of the above reasons, cotton planting was not profitable. No cottage was planted in the same village this year, but in the same period last year, cotton prices and cotton prices rose all the time, and the market was good.

Mao Hancheng's story is not a case. Reporters learned that, by the double impact of the market and price, some cotton enterprises in Yancheng have already stopped the purchase and purchase of seed cotton. For example, in Yancheng City, there were more than 3-4 cotton seeds produced in the last year. Affected by the sudden drop in lint and yarn cloth prices, the local quasi grade seed cotton has recently been quoted at 4.50 yuan / Jin. At such a low price, cotton holders have no desire to sell, and most of them choose to continue to hold. Therefore, some cotton enterprises expect to buy some cotton costs from 20000 yuan / ton to compensate for some of the high losses last year, but too low prices will make it more difficult to buy them, and it will be difficult for them to buy more.

According to another report, Hubei Province, the fourth largest cotton producing area in China, has suffered from a severe drought for 60 years, which has affected the growth of cotton and caused the market to worry about cotton production in 2011/12. Downstream textile enterprises are facing difficulties in production and marketing, forcing cotton spot prices to show signs of weakness. The four grade cotton prices have dropped to 24000 yuan / tonne pass. The enthusiasm of cotton growers is being tested.

However, the weakness of the cotton producing areas in the south is only a partial problem and does not reflect the overall situation. In the northern cotton producing area, there is another scene. The reporter learned that since June, the spot sale of cotton in Jizhou, Hebei has seen a slight rise in volume and price, and local cotton traders' confidence has been restored due to falling cotton prices. In the Hebei River, cotton prices have risen all over the market, and market buying and selling is increasing. Many enterprises from other parts of the country purchase locally and have larger turnover. On June 2nd, a company sold 50 tons of grade three cotton, the price was 24700 yuan / ton, half of the goods were paid in advance, the balance was paid within 20 days, and the buyer was an enterprise in Binzhou, Shandong. On the same day, many enterprises sold lint at a price. At present, inventory processing enterprises "bag for safety" mentality. Seed cotton prices rose 0.05 yuan / Jin, the day's quotation for three level 4.75 yuan / Jin, four class 4.65 yuan / Jin, four four 4.58 yuan / Jin. Although cotton farmers' enthusiasm for sale has not been seen for the time being, many processing enterprises have begun to buy, and there are obvious signs of improvement in the market.

　　 Revival of hope

The collapse of cotton prices has made many textile enterprises in the downstream of the industrial chain suffer heavy losses. "There has been some slight rebound in the northern cotton market recently, but for cotton spinning enterprises, it is no less than a timely rain after the great drought in the south." A sun surname engineer of China Textile Group told reporters.

The engineer recalled that in 2010 cotton futures once surpassed copper's leading position in the futures market. Prices rose from 17000 yuan per ton in May last year to two yuan in November and February this year, and now they are close to 35000 yuan, and now they are below 25000 yuan. He said high cotton prices once put pressure on cotton spinning enterprises on high costs, but that could be offset by higher sales prices. However, since March this year, the Japanese earthquake triggered a massive fall in the commodity market. Domestic and foreign futures market fluctuated sharply, and the pressure on the spot market, coupled with the poor operating conditions of textile enterprises, raw material procurement became more cautious, and the cotton price plunged. The domestic cotton prices fell rapidly on average 3 yuan per day for 500 yuan / ton. In two months, it plunged nearly 30%. The profits of cotton spinning enterprises have shrunk sharply, facing the tension of capital chain. Take cotton yarn production as an example, profit from 169 yuan per ton to 286 yuan per ton, and some small factories close. If this situation persists for a long time, many cotton spinning enterprises will have to die.

"Cotton as raw material, its price rise will occupy the amount of funds of enterprises, while the decline will have a greater impact on enterprises, which means a direct reduction in profits." Liu Cheng, a researcher at the China commercial circulation Productivity Promotion Center, told reporters. Dong Shuzhi, manager of the cotton business department of Peking University Founder group, said that if the downstream textile enterprises saw the decline in cotton prices, they would reduce the order for the upstream enterprises because of the herd mentality of "buying up or not buying", which would lead to the continued decline of cotton prices, which would lead to a "downward price cycle".

Liu Cheng suggested that in this case, if enterprises want to shake off the constraints of capital chain tension, they should establish a complete industrial chain as soon as possible. Cotton textile enterprises should take the initiative to go to the cotton producing area and establish a cotton acquisition base, which can not only protect the income of cotton farmers, but also protect their own production needs, and form a complete industrial chain of cotton planting cotton processing cotton spinning weaving dyeing and clothing.

In addition, enterprises to inventory in order to protect themselves is also a good way to deal with hardships. According to a research report of a large and medium-sized textile enterprise in the authoritative organization of the industry, the cotton inventory and cotton yarn inventory of textile enterprises decreased slightly last month compared with last month. In the case of shrinking profits or even losses, the huge inventory of enterprises made the enterprises unable to bear heavy burden, and the inventory to a certain extent can alleviate the pressure of the financial strain.

　　 Have good prospects of gain

Sun textile engineer of China Textile Group believes that at present, the rebound trend of cotton prices in the North tends to be obvious. The price difference between North and south of cotton is widening. Enterprises can buy and sell cotton products in the north for production and processing, and then sell the finished products in South market, because cotton textiles can be made more profitable in South market.

For the outlook for the second half of the cotton textile industry, despite the pessimism of the industry, many experts believe that the outlook is promising.

Orders for some large textile enterprises did not show a sharp decline. Xiao Jingyao, engineer of Huafang group, said: "orders have been received recently, and orders are relatively stable. However, this year's export orders have been reduced, but they will not suddenly disappear. In the short term, China's textile foreign trade status can not be replaced. " Dong Shuzhi told reporters that the operating rate of large and medium-sized textile enterprises in May increased from 86.9% to 95.3%, indicating that the orders received by large and medium-sized textile enterprises increased. Some people in the industry also believe that the "killer" cotton price, which caused the textile enterprises to get into trouble, will stabilize after a continuous decline. Some traders also expressed optimism about the future of cotton, indicating that the company had plans to take orders on the September contract.