Behind The Frenzied Cotton Price: Multi Party "Pushing Hands" Hidden In It.

Last week,

Cotton is an important strategic material of the country. Behind the frenzied cotton price, many "push hands" are hidden.

The gap between supply and demand is as high as 30%.

In August 19th, when the Economic Herald reporter rushed to the office of Ma Junkai, Secretary General of Dezhou agricultural material association and cotton association, he was finishing a material about "Dezhou cotton purchase and sale", ready to welcome Zheng Jiao who was coming to investigate recently.

Looking at the rain outside the window, Ma Junkai frowned and his thoughts were difficult. "Cotton fields may be cut down again."

As an expert who has been immersed in the cotton field for nearly 20 years, Ma Junkai first interpreted the main reason as "a serious imbalance between supply and demand" in interpreting the soaring cotton prices.

According to his introduction, preliminary investigation shows that the cotton planting area of Shandong has decreased by 5% this year, and the number of other cotton producing provinces has also been reduced. In addition, cotton production has not been effectively increased in the last year. The textile industry has gradually gone out of the trough, and the growth momentum is good. In the first half of this year, the spinning volume increased by 16.9%, and cotton demand is gradually increasing.

"Cotton planting area is decreasing while textile industry is recovering.

Especially from last October to June this year, the amount of cotton used by spinning enterprises has increased, and the price of cotton yarn has been rising.

Ma Junkai said that the sales profit of cotton yarn has doubled several times than that of last year, and the profit of cotton yarn enterprises has obviously increased on the whole textile industry chain.

The price pmission in the industry chain has gradually weakened, but the relevant enterprises are still facing the "spring of development".

What is the current gap between supply and demand of cotton? Statistics show that cotton production is expected to be around 7 million tons this year (September 2009 -2010 August), and the consumption estimate is around 9 million 500 thousand -1000 million tons.

That is to say, the gap is about 3 million tons and needs to be compensated by imports or policies.

Judging from Shandong, as the second largest cotton producing province and the largest textile Province in the country, the yarn and cloth output of Shandong ranks first in the country. The province has 2518 Textile Enterprises above Designated Size, and the demand for spun cotton is over 4 million tons, accounting for about 1/3 of the national demand, while the actual cotton output is only about 1 million tons.

The annual cotton consumption in Dezhou is about 500 thousand tons, while the output of cotton is only about 180 thousand tons. The contradiction between insufficient production and demand is even more prominent. Raw cotton needs to be purchased from other provinces and regions such as Xinjiang and abroad.

In addition, in recent months, many provinces in southern China suffered floods. The industry predicted that China's cotton production would be reduced by 5%-10%. 30% of cotton fields in Pakistan were destroyed by floods, which would lead to a net importing country from cotton exporting countries. The US Department of agriculture also predicted that in 2010 cotton stocks would only have about 40% of the annual demand, the lowest in 15 years.

In fact, in the past year, the price of cotton in the futures exchange of the Intercontinental Exchange has risen 33%, approaching the 15 year high.

"From the domestic point of view, the current gap between supply and demand of cotton has reached 30%, and if the planting area and output decrease in the next year, the gap will increase to 40%-50%.

Ma Junkai said.

Crowding out effect

In order to stabilize the soaring cotton prices, the national development and Reform Commission has recently issued two cotton slip tax quotas in a row. In May and June this year, it issued 800 thousand tons and 868 thousand tons sliding quota cotton quota respectively. At the same time, the cotton storage was accelerated, and the 600 thousand tons of stored cotton were sold by the central storage cotton in August 10th.

The dumping and storage of large quantities of raw materials will often play a role in stabilizing prices. But the reporter reported that the contract prices of cotton futures in Zhengzhou exchange are still going against the market.

The reserve price of the reserve cotton is 16 thousand and 500 yuan / ton, but the paction price mostly stands at a high level of more than 18 thousand and 200 yuan.

"Unlike wheat and corn, which rely mainly on domestic production capacity and self-sufficiency, China's cotton imports have been relatively large.

While the international cotton futures prices soared, the end of the global inventory continued to decline, pulling "zhengmian" continued to strengthen.

Ma Junkai said.

There is a further increase in the gap.

Judging from Dezhou, a big cotton producing city, the sowing data in recent years are indeed worrying.

According to the data obtained from the Dezhou Cotton Association, the local cotton planting area in 2004 was 3 million 400 thousand mu, the highest in the past 15 years, and 2 million 500 thousand mu in 2005; in 2006-2008 years, it was stable at 2 million 600 thousand mu, 2 million 700 thousand mu and 2 million 900 thousand mu respectively; in 2009, it dropped to 2 million 300 thousand mu.

The latest statistics show that the cotton planting area in 2010 is only 1 million 560 thousand mu, a sharp drop of 32% over the previous year.

"Cotton has lower comparative benefits, and subsidized policies are not as good as grain.

With the rapid rise of grain prices, cotton planting has also formed a certain "crowding out effect".

According to Ma Junkai's latest research, with current grain price accounting, planting grain can earn more than 289 yuan per mu than cotton per mu.

"Now the degree of mechanization of grain growing is higher and higher, employment is reduced, and planting cotton is more invested and mechanized operation rate is low. Grain crops have good seed subsidies and comprehensive subsidies for agricultural products. Only seed subsidy is available for seed cotton, and only 15 yuan per mu. In addition, grain has a minimum purchase price policy, and cotton is not available."

Ma Junkai judged that next year cotton planting area may also decline, and will therefore affect the trend of cotton prices.

In addition, on August 8th -13, heavy rainfall continued in Dezhou, which had a significant impact on cotton growth during the bud stage.

Especially in Xiajin, Yucheng and other places, the rainfall is relatively large, and the cotton in low-lying land is immersed in water, and basically produces no fruit.

According to preliminary statistics, about about 300000 acres of cotton were affected, of which nearly 100 thousand acres were severely damaged, and the total output of cotton was estimated to be reduced by more than 10%.

"Stir fry cotton" undercurrent surges

"Although bad weather and reduced planting area affect cotton production, these do not seem to support the year-on-year increase in cotton prices above 4."

Sui Gang, a large cotton textile operator in Yucheng, Dezhou, has told reporters that the "shortage" and "rise" are often the targets of speculative capital. He suspected that there was speculation and even profit from speculation in the cotton business, but the level of speculation was unknown.

According to China's cotton price index, the price of standard cotton has risen from the average price of 12831 yuan / ton in 2009 to 1.8 yuan / ton in July this year.

Although the traces of speculation are hard to find, "hoarding" is well documented.

According to the survey data of the cotton information network of the national cotton trading market, the average cotton stocks in cotton spinning enterprises nearly 38 days in the early August, though slightly lower than those in the early July, but still more than 20% above the average level in the recent 3 years.

This means that as cotton textile enterprises hoarding cotton to a high level, these enterprises bought cotton hoarding at a lower price a few months ago, and could gain a lot of benefits no matter whether they were processed into yarn or sold directly after several months.

According to Sui Gang, according to his understanding, some large cotton traders have recently withdrawn funds from other areas such as real estate and used them to promote cotton.

"Although the industry has decided to take part in the speculation of cotton industry or mainly in the industry, there are also some hot money in Zhejiang and other places, which have intervened through some consulting firms in the industry.

The recent market is also widely rumored that at least 10 billion (yuan) of Zhejiang's private capital is evacuated from Shanxi coal mines and domestic real estate to Xinjiang cotton. "

In Dezhou, some giant figures are also looming.

The reporter was informed exclusively during the local interview that four of the 80% multinational grain traders controlling the world's grain trade volume had two "latent" locals.

People familiar with the matter said that Louis, France and Yucheng, the four major grain producers, had rented warehouses at the cotton and hemp station in the city of the United States as a reserve station to buy cotton lint from many farmers. "It has been going on for several years."

The source revealed that the two giants deliberately avoided each other in order to keep the price secret, choosing different acquisition locations respectively.

In addition, the purchase price of the two parties is very flexible, basically based on the cotton futures price of the previous day, and then independently calculate the purchase price (the purchase price may vary every day), so as to realize futures hedging.

However, its annual funds and acquisitions are still unknown.

Therefore, whether it will affect the local and national cotton market in the future is worth careful observation.

At present, more and more textile and garment workers worry that cotton will become another hot spot of speculation in the market, just like last year's garlic.

Moreover, due to the persistent rise in cotton prices, more and more countries are planning to reduce the export of cotton. Therefore, the reduction in circulation is bound to further push up cotton prices and provide opportunities for speculative capital.

"Another reality is that some cotton spinning enterprises expect higher cotton prices in the future and feel that buying later is better than buying now, which is equivalent to magnifying demand and affecting further fluctuations in cotton prices."

Sui Gang said.

In Ma Junkai's view, cotton prices are low and farmers are unwilling to grow, so planting area has declined, planting area has decreased and cotton prices have been pushed up, and domestic demand for spun cotton has not decreased.

"According to this analysis, cotton prices will be running high in the next few years, and the era of low cotton prices has become history. The era of high cotton prices has arrived."