Fresh Cotton Consumption Is Flat And Inventory Pressure Continues To Expand

In 2013, a bumper harvest of new cotton is in sight. In the face of the flat consumer market, large internal and external price difference, and uncertain international economic situation, it is suggested that relevant departments introduce policies and measures for sustainable development of cotton industry as soon as possible.

The purchase price of new cotton is steadily rising in the city of temporary storage

In 2013, various cotton regions across the country suffered from severe weather such as low temperature, drought and waterlogging to varying degrees. Under the condition that the planting area decreased by 4.4% year on year, the total cotton production capacity is expected to reach 6.86 million tons, a slight increase from the previous year. Among them, Xinjiang's cotton production accounts for more than 50% of the total national production. Under the support of the national temporary cotton storage policy, the purchase price of new cotton has risen steadily. Since the listing of new cotton in September, the average purchase price of seed cotton nationwide has been 8.2 yuan/kg, up 2.7% year on year, of which the purchase price of Xinjiang cotton has reached about 9.3 yuan/kg.

The domestic cotton market price is stable, and the international cotton price is gradually rising, but the internal and external price difference is still large. In 2012/2013 (from September 1, 2012 to August 31, 2013, the same below), the average price of domestic 328 grade lint was 19133 yuan/ton, the average price of international cotton price Cotroo-kA index was 88.7 cents/pound, the import CIF price converted by 1% and 5% tariff was 14232.9 yuan/ton and 14725.3 yuan/ton respectively, and the average annual difference between domestic and foreign prices was 4900 yuan and 4408 yuan respectively. Due to the price and quality advantages of foreign cotton, China imported more than 4.4 million tons of cotton in 2012/2013, a decrease of 19.2% over the previous year, but still at a historical high, of which 3.025 million tons were imported from January to August 2013.

Consumption is flat and inventory pressure continues to expand

The supply of cotton is relatively stable and abundant, the domestic cotton consumption market is flat and weak, and the inventory pressure continues to expand. In 2012/2013, the national spinning volume was 35.05 million tons, up 10.8% year on year, but the growth rate dropped by 1 percentage point compared with the same period of the previous year. From January to September 2013, the national total spinning volume was 25.766 million tons, up 7.5% year on year, and the growth rate fell 5.7% year on year. In 2011, since the country launched the temporary cotton storage policy, more than 9.7 million tons of cotton have been stored; During the same period, 9.836 million tons of imported cotton has been accumulated. At present, 4.5 million tons of national reserve cotton has been put on the market, and the actual turnover is 3.71 million tons. In 2013, the country continued to implement the temporary cotton storage policy, and the enthusiasm of enterprises for delivery and storage continued to increase, and the inventory pressure continued to increase.

According to the latest forecast of the International Cotton Advisory Committee (ICAC), the global cotton output in 2013/2014 will be 25.54 million tons, a year-on-year decrease of 4.9%; The consumption was 23.5 million tons, a slight year-on-year increase, and the import and export trade volume was about 8.5 million tons, a decrease of 15.8%; The global ending inventory will reach 20.4 million tons, an increase of 1.58 million tons or 8.6% over the previous year, of which China's cotton reserves will increase to 11.4 million tons, accounting for 60% of the global inventory.

Sustainable development of cotton industry needs policy support

In the next two years, the pace of global economic recovery is slow, and the situation of cotton demand recovery is still unclear. The domestic economic growth has slowed down, the RMB exchange rate has continued to rise, under the temporary cotton purchase and storage policy, the raw material price is high, cotton consumption is difficult to fundamentally improve in the near future, and the task of balancing domestic cotton supply and demand is arduous. It is suggested that the national cotton related departments should study and formulate cotton support and regulation policies in the post harvest and storage period as soon as possible to ensure the healthy and sustainable development of the cotton industry.

1、 We will improve direct subsidies for cotton production. It mainly includes: (1) subsidies for improved varieties. Improve the subsidy standard for improved varieties from the current 15 yuan/mu to 30 yuan/mu. This subsidy can also be used by issuing seed coupons. Cotton farmers can purchase improved varieties from qualified dealers with seed coupons for cash use. The use scope is limited to varieties in the improved varieties list. (2) Comprehensive subsidies for agricultural materials. In recent years, the input of cotton production material and service cost accounts for about 40% of the total production cost. With reference to the comprehensive subsidies of grain and agricultural means accounting for 15% of the food material input, it is suggested that the comprehensive subsidies of cotton production agricultural means should be about 115 yuan/mu. (3) Direct subsidies. Referring to the current amount of direct subsidy for grain planting in most provinces of China, it is suggested that the standard of direct subsidy for cotton planting should not be less than 15 yuan/mu. (4) We will expand subsidies for agricultural machinery. The proportion of purchase subsidy for floating cotton machine shall be appropriately increased, and 20%~30% of purchase subsidy shall be given. The first three subsidies are 160 yuan/mu in total. Calculated according to the national cotton planting area of 70 million mu, except for agricultural machinery subsidies, the production subsidy expenditure is 11.2 billion yuan, which is far lower than the financial expenditure of the temporary storage policy for cotton inventory storage costs, interest and payment of price differences.

2、 Build a cotton farmers' income subsidy mechanism. It mainly includes two aspects: first, determine the minimum purchase price to ensure the reasonable income of cotton farmers, and establish a dynamic income subsidy mechanism. First, refer to 40% cotton planting cost profit margin; Second, a reasonable grain cotton ratio of 1 ∶ 10; The third is to refer to the linkage between domestic and foreign prices and the reasonable price range. Second, expand cotton planting insurance. That is to say, the loss caused by production reduction due to natural disasters or major disease and insect disasters should be insured. It is suggested that the insured amount should be increased from the current 600 yuan to 1000 yuan, and the central government should appropriately increase the subsidy for premiums.

3、 We will improve the cotton import quota distribution management system. On the one hand, we will continue to adhere to the policy of 1:3 import quota and national reserve cotton import quota; On the other hand, it is suggested that import quotas should be auctioned to strive for fairness and justice.

4、 Strengthen the construction of cotton production capacity. Increase investment in improving cotton production capacity, including the promotion of light and simple cotton cultivation technology, transformation of medium and low yield fields, etc; Increase the support for cotton technology service promotion system, and increase the research, development and promotion of cotton production and harvesting mechanization.

5、 It is suggested to take the lead in introducing ecological protection subsidies in Xinjiang cotton regions. Increase the subsidy for drip irrigation construction to 400 yuan/mu, and subsidize farmers with drip irrigation belt investment according to the standard of 50 yuan per mu; Subsidy for the use and recycling of plastic film in Xinjiang.