Analysis Of Cotton: Return From Financial Attributes To Commodity Attributes

"In May 9th, the national development and Reform Commission lowered the price of domestic refined oil for the first time in the year, and the price of gasoline and diesel decreased by 330 yuan and 310 yuan per ton respectively.

Accordingly, the retail price of gasoline No. 90 and No. 0 is reduced by 0.24 yuan and 0.26 yuan per litre respectively.

Obviously, this is a news that most people are happy about.

However, as the benchmark for crude oil prices, the impact of the plunge in prices has not ended, and commodities are still in the bottom market.

Some experts believe that under the guidance of crude oil, commodities will start a new decline at any time in the future.

In fact, the decline in crude oil prices means a slowdown in demand, and the global economy has not yet bottomed out.

This year,

The "falling down" situation also shows the fact that the global economic situation has led to a decline in demand for cotton.

From September 1, 2010, domestic cotton prices surged from 18002 yuan / ton to 31302 yuan / ton. At the end of 2011 at the end of 8 cotton, China's cotton price index dropped to 19307 yuan / ton.

In reflecting on all these factors, cotton speculation has become a common concern. Therefore, it is necessary for us to draw up a theoretical topic -- the financial attribute of cotton products.

Bulk commodities

Financial attributes are increasingly prominent.

Today, with the rapid development of the financial derivatives market, the financial attributes of commodities, especially international bulk commodities, are more and more obvious.

The basic attributes of commodities are value and use value.

Commodity exchange has developed to a certain stage, and money has been used to measure the value of commodities.

With the development of commodity economy, the importance of price is self-evident.

All goods have price, price is the core element of market economy, and is the foundation of all economic activities.

The value of a commodity is expressed through price, and the fluctuation of price reflects the scarcity of commodities or the relationship between supply and demand.

However, with the development of society, the supply and demand information and other factors that can affect prices are difficult to achieve justice for all, and the phenomenon that price deviates from value inevitably arises.

In particular, when people realize that such a deviation may bring great benefits, speculation arises.

According to the basic principles of economics, commodity prices are determined by market supply and demand.

But once the price does not reflect the relationship between supply and demand, or even deviate greatly from value, commodities become speculative media or carriers. The price of commodities is determined by the financial attributes of commodities.

Under normal circumstances, the basic attributes of commodities play a leading role in commodity prices, and the trend of market prices depends on supply and demand. However, under special circumstances, financial attributes of commodities can play a leading role.

In recent years, the financial attributes of international bulk commodities have become increasingly prominent and are constantly being exploited by speculators.

The sustained rise in July 11, 2008 reached a historical high of 147.27 US dollars / barrel, and then it plummeted. At the end of the year, it fell to about 40 U.S. dollars / barrel, reaching a new low since 2004. The gold price trend has been promising. Although it has gone through the 2008 fluctuation, it has seen a whole rise, rising from 300 dollars to nearly 1600 US dollars over the past 10 years, and over 5 times. Since 2010, the international commodity market has seen a trend of collective rise, and commodity prices have gone all the way. The IMF price index shows that the annual price index of commodities has increased by 24% over the same period, and the price index of industrial raw materials, non-ferrous metals and foodstuffs has increased by 32.1%, 32.1% and 26.5% respectively. International crude oil prices since 2004

Roller coaster Market

Highlight the financial attributes of cotton

Cotton is an important commodity related to people's livelihood.

First, a large consumer country has long been short of production and highly dependent on imports, but there is a time lag between international allocation of resources and production demand. As an agricultural product, cotton also has seasonal, regional production and year-round use of contradictions.

In 2010, strong textile demand and natural disasters led to global cotton production. All these factors had an impact on cotton prices.

But from historical experience, these factors are the daily factors leading to the fluctuation of cotton prices, and the cotton prices affected by these factors will not deviate too far from the value.

Especially in recent years, the international cotton market is fully stocked at the end of the term, and the supply and demand are basically balanced all the year round. The change of market supply and demand is not enough to cause great changes in prices. The emergence of the roller coaster market shows that the financial attributes of cotton play a very important role.

The financial attributes of commodities are closely related to the investable attributes of commodities.

The scarcity, hoarding, unit value and volatility of commodities determine the degree of financial attribute of commodities.

As an agricultural product and industrial raw material, cotton itself has the characteristics of easy accumulation and easy preservation. Secondly, with the continuous development of the futures market and the completion of the reform of cotton quality inspection system, lint quality and packaging are gradually integrated with the international standards, and have unified standards and specifications, and the value of single cotton is higher, which is convenient for circulation and realisation.

Thirdly, the liquidity in the post financial crisis era has become an incentive for the financial attributes of cotton to play a role.

In 2010, the global economy gradually recovered from the financial crisis, and the major economies continued to implement the economic stimulus plan. A large amount of funds needed to find the direction and goal of investment, coupled with the stimulation of inflation and production expectations, all of these created the necessary conditions for the leading role of cotton's financial attributes.

After 6 years of exploration and development, Zheng cotton futures market in China has a certain market base, but speculators become active individuals in the market, resulting in the sharp rise and fall of futures prices.

Supply and demand relationship

Still dominating cotton prices

In any case, although the financial attributes of cotton may cause commodity prices to deviate significantly from intrinsic value, this deviation is generally short-term. In the long run, supply and demand are still the basic factors determining prices.

This is not difficult to understand, because the financial attributes of commodities are derived from the basic attributes. The financial attributes of commodities are only a manifestation of the basic attributes (values) under the special circumstances determined by supply and demand.

2011/2012 cotton annual world cotton price trend has fully verified this point.

There is no doubt that when the price of cotton is dominated by financial attributes, the market becomes a paradise for speculators.

The operators have great risks.

Therefore, when cotton prices are high, especially when market prices are going up and down, we should pay more attention to the factors of speculation and take timely measures to prevent price risks.

At the macro level, relevant departments are also strengthening research on the industry, and timely introducing policies to protect the healthy development of the cotton industry.

For example, in 2011, the state's temporary cotton purchase and storage system played a positive role in stabilizing the price of cotton market.

However, some industry experts suggest that the establishment basis, adjustment mechanism and operation process of the purchase and storage price need further improvement and development.

With the development of marketization and informatization, China's cotton industry will face more new situations and new problems. The whole cotton production area, purchase price and stable operation of textile market are still the core issues. The development of the cotton industry needs further protection and support from the national policy.

At the financial regulatory level, experts suggest that futures regulation and credit regulation should be "two pronged".

On the one hand, we must strengthen the crackdown and restriction on speculation and speculation in futures market, and speculative funds can not be unrestrained and arbitrary.

On the other hand, financial support and credit security should be effectively unified.

The development of cotton industry is inseparable from financial support.

The main source of funds, the annual credit support purchase volume accounts for about 1/3 of the total cotton output in the country. However, at present, whether the cotton purchasing enterprises or textile enterprises are generally weak and their own capital strength is not strong, it is necessary to strengthen the supervision of the flow of credit capital and strictly prevent credit funds from entering the futures market.