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Where will the cotton market go in 2015?

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Where will the cotton market go in 2015?


In 2014, all cotton policy adjustments have been implemented. When the old and new policies are changing, China's cotton industry is undergoing a difficult and painful transformation. At present, 2015 has just begun. What changes will happen to the cotton market in the new year? What are the factors affecting the development of the cotton market? Although 2014 has ended, according to the cotton year, the time has just passed half. At present, it is difficult to give the market a final conclusion. In 2015, whether the cotton market will continue to fall forward or stabilize and rise, there are still debates in the industry. But it is undeniable that the global supply exceeds demand, which forms a huge pressure on cotton prices. Industry insiders said that if there is no policy stimulus in the domestic cotton market, or if the downstream demand is not improved, it will be difficult for cotton prices to rebound substantially, and the continuously falling cotton prices will continue to affect China's cotton and cotton textile industry.

The policy of cotton market elements

It will not expand the scope of the pilot project

At the recently held 2015 Forum on agriculture, rural areas and farmers, Du Ying, counsellor of the State Council and former deputy director of the national development and Reform Commission, said that the scope of direct subsidy for cotton target price implemented since 2014 will not be expanded in 2015, and it is still within the original scope. Du Ying said the reason for this is that the government wants cotton planting to concentrate from the Huanghuai sea area to Xinjiang.

The news just verified the industry's previous speculation on the pilot policy of cotton direct subsidy. When the news of direct subsidy policy for cotton just came out in 2014, some insiders speculated that the government's intention was to "abandon the mainland and protect Xinjiang". Although the mainland also introduced a subsidy policy, but for the mainland cotton farmers, will still lose money, subsidies are just better than nothing.

Chen Xiwen, deputy director of the development research center of the State Council, made it clear that under the current international market price of agricultural products, the mainland is not suitable for cotton production. He said that this year's cotton market price is expected to be 13500 yuan / ton. Xinjiang's main production areas will subsidize according to the difference between the target price and the actual price, that is, 6300 yuan per ton per ton and 2000 yuan per ton in the mainland. According to the calculation of 100 kg lint per mu of medium-sized land, farmers in the mainland can get 200 yuan of subsidy for one mu of land and lose 600 yuan per mu of land. Naturally, some farmers will choose not to plant cotton this year, so the cotton price will slowly recover.

According to this analysis, the policy of cotton market in 2015 will not change greatly, that is to say, the government will not issue a "rescue" policy, and cotton farmers in the mainland are still in a state of no profit or loss in cotton planting. Industry insiders estimate that cotton farmers' income in 2015 / 2016 may be even less, especially in areas where cotton planting advantage is not obvious in the mainland. This is because cotton prices were raised too fast in the past, which is also the price that must be paid for market-oriented reform.

At present, the progress of target price policy in Xinjiang is generally smooth, and the market pricing mechanism has begun to play a role. However, after the implementation of Xinjiang cotton purchase, sales, subsidies and other links in 2014, the problems existing in Xinjiang's target price reform have also emerged. According to estimates, Xinjiang's cotton target price subsidy will reach more than 25 billion yuan this year. At the same time, 60% of the subsidy is paid according to the area and 40% according to the sales volume. It will cost a lot of labor to check the cotton area, and there is a risk of corruption when invoice is issued. In this regard, Du Ying said that there are some problems in the operation of cotton subsidies in Xinjiang, such as the verification of cotton area and the verification of cotton sales volume. It is mainly because there are too many wasteland reclamation in Xinjiang, and it is difficult to define illegal and legal land reclamation. However, the subsidy mode of 60% based on area and 40% based on sales volume is more complex. But he said the problem of operation is not difficult to solve. Especially in the new cotton year, the policy will continue to improve.

Supply and demand of cotton market elements

Textile enterprises to supplement the power to enhance the warehouse

China has implemented the policy of temporary collection and storage of cotton for three consecutive years, which makes the domestic cotton price remain high for a long time, and the downstream textile enterprises are in a dilemma under the multiple attacks of high cotton price and falling orders. After the implementation of the cotton target price policy, the cotton price will be determined by the market supply and demand, and the price gap between domestic and foreign cotton will gradually narrow, but the demand for cotton has not improved.

In 2014, after the implementation of the subsidy policy for cotton target price, the domestic cotton price was in the downward channel, and the enterprise inventory devalued rapidly, and the enterprises insisted on buying as soon as they used the raw materials, so as to reduce the inventory. In 2015, whether the cotton market demand has improved? The analysis shows that in 2015, the enterprise replenishment power increased, and the market demand increased.

According to historical experience, the fluctuation of cotton price has obvious cyclical impact on domestic cotton supply and demand and the inventory scale of enterprises. The industry estimates that with the arrival of the historic bottom of cotton price, textile enterprises have the power to purchase additional raw materials. In 2015, the demand for centralized inventory replenishment in downstream will drive the restorative growth of the industrial chain and further enlarge the growth rate of performance.

However, the huge cotton inventory of the state-owned storage of cotton makes enterprises have to worry that some enterprises compare the state-owned cotton to a time bomb. Once it explodes, the lethality of the textile enterprises will be fatal. At present, the scale of domestic reserve cotton is more than 10 million tons, which is at the level of historical quantity. However, the demand of cotton in China is 6.5-7.5 million tons in a year. In 2015, it will be in a state of "supply significantly greater than demand". But previously, the relevant personnel of the national development and Reform Commission made it clear that only when the overall sales of new cotton reached 70% - 80%, or when there was a serious shortage of supply and demand, or when the price rose sharply, it would be dumped and stored. Therefore, in terms of supply and demand