The Decline In Cotton Prices Has Benefited The Textile Industry.

"It is expected that the domestic cotton spot price will fall accordingly after the last baffle of the price fall is removed." For the landing of the new cotton policy in Xinjiang, Sun Liwu, an information cotton analyst, told the daily economic news reporter that this is also good for the domestic cotton market to get out of the price much higher than the international predicament.

　　 Cotton purchase and storage Direct subsidy

The policy of temporary collection and storage of cotton for more than 3 years ended.

"Normalization of temporary policies has led to serious price upside down at home and abroad, and market participants are reluctant to enter the market. Eventually, the state becomes the sole buyer and seller instead of the merchant. The pressure on purchasing and storage has increased dramatically, which has affected the sustained and healthy development of the industrial chain." Wang Jianhong, Deputy Secretary General of China Cotton Association, has publicly stated before.

In April of this year, the Xinjiang cotton target price reform pilot program was announced, and the abolition of the temporary purchase and storage policy of cotton and soybeans was seen as a key step in exploring the reform of the price formation mechanism of agricultural products (000061 shares) and the decoupling of government subsidies.

In the first two years, purchasing and storage became the main destination for domestic cotton production. Data show that in 2012 and 2013, the total storage capacity reached 6 million 620 thousand tons and 6 million 580 thousand tons, accounting for 90% and 95% of the year's output respectively.

During the cotton planting period this year, the state announced that the target price of cotton in Xinjiang in 2014 was 19800 yuan per ton. The cotton prices in Xinjiang, the main cotton producing area, have been directly supplementation, and the corresponding rules have also been released.

In September 17th, the people's Government of the Xinjiang Uygur Autonomous Region officially announced the implementation plan of cotton target price reform. 60% of central subsidy funds will be subsidized by cotton planting area, 40% will be subsidized according to the actual sales volume, and the temporary purchase and storage will be cancelled.

"In the long run, prices will ultimately be determined by market supply and demand, which is a good thing for the downstream cotton spinning enterprises." Sun Li Wu Told reporters that instead of direct subsidies, short-term impact on cotton prices have been formed, the market price has dropped significantly.

　　 domestic Cotton price Or continue to go down

The price subsidy will help stabilize the cotton farmers' income and the domestic textile enterprises will also benefit from the reduction of raw material costs.

It is understood that in recent years, the domestic cotton price is far higher than the international cotton price: in 2013, China's cotton temporary storage and storage price was 20400 yuan per ton, while the cost of imported cotton after paying taxes was 15580 yuan per ton, which was 4820 yuan lower than the domestic temporary storage and purchase price. In 2012, domestic and foreign cotton "price upside down" also reached 5000 yuan per ton ~6000 yuan.

Reporters noted that with the continuous decline of domestic cotton prices this year, the current gap has narrowed significantly.

Zhuo Chuang's information statistics and monitoring data show that the average price of grade 3128 (left axis) lint has dropped from the end of March to the current level of 16000 yuan to 17000 yuan / ton from 19000 yuan / ton. In May this year, the difference between domestic and foreign cotton prices was reduced to 1423 yuan / ton, a record low of 3 years.

"At present (lint), the price of Chen cotton is 16800 yuan / ton, and the new cotton is 15500 yuan / ton." Sun Liwu pointed out that with the listing of new cotton in Xinjiang, domestic cotton prices are going down. "The supply of cotton is determined by market supply and demand, and cotton supply exceeds demand. Cotton prices will continue to go down in a short or continuous way, but they will be good for downstream cotton spinning enterprises."

The most direct impact is the price difference between home and abroad, and the most direct impact is that the downstream cotton spinning enterprises are constrained by the high cost of raw materials.

Li Guoxiang, deputy director of the Rural Development Research Institute of the Chinese Academy of Social Sciences, has publicly stated that "price distortions are very damaging to the entire industrial chain." In particular, the overall loss of enterprises in the middle and lower reaches of the industry chain is not sustainable.

Today, domestic cotton prices continue to decline, which is undoubtedly good for downstream cotton spinning enterprises. "Raw material cost often accounts for 50%~70% of cost, market price drops, cotton spinning enterprises reduce costs; on the other hand, high cost in the past also results in the lack of competitiveness of enterprises." Sun Liwu said.

Sun Liwu believes that next, domestic cotton prices continue to decline, which is determined by the supply relationship of the market.

"The whole is supply exceeding demand". If we throw away about 11000000 tons of cotton stored in the state treasury, the overall domestic supply pattern will be relatively balanced. But because the storage and storage occupy a lot of resources, and cotton storage is not long enough, all need to be heavy, which will result in an oversupply of the market and a low cotton price. Sun Liwu told reporters.