Restraining Prices From Rising Too Fast "Good Medicine" For The Cotton Market "Fever"

Cotton pickers harvest cotton in Hami cotton field, Xinjiang.

Recently, domestic cotton prices rose too early and too fierce. Zheng cotton futures contract was the 3 time limit, and cotton price rose at 24%.

In the face of this market situation, we should increase the reserve cotton rotation to ensure the smooth operation of the domestic cotton market by adjusting the listed reserve cotton structure, increasing the intensity of reserve cotton inspection and adjusting the main body of the cotton reserve paction.

Under the effective guidance of macroeconomic policy and regulation, cotton prices have dropped significantly since the beginning of June, and cotton futures and spot markets have gradually returned to rationality.

The delivery of reserve cotton not only effectively fills the gap between supply and demand of the market, but also plays a positive role in stabilizing the cotton market, stabilizing market expectations and suppressing excessive speculation.

Recently, domestic cotton prices have risen too early and too fast.

Industry experts said that this round of cotton prices rose, partly due to the exaggeration of the disaster weather in some parts of Xinjiang in the early May. On the other hand, with the advance of stocking cotton stocks, the market was generally optimistic about the demand for imported cotton in the new year.

However, according to the domestic output, import volume and the number of cotton reserves that have been put into operation this year, domestic supply is enough to meet domestic consumption demand.

In order to stabilize the cotton market, relevant departments have issued a series of policies. Under the influence of the policy of "combined boxing", cotton prices rose too fast in early June, and cotton prices gradually returned to normal level.

Reserve cotton market as "stabilizer"

5 in the middle of the month, Zheng cotton futures contract appeared 3 times limit, the fluctuation range was 15580 yuan to 19250 yuan per ton, the amplitude was as high as 24%.

In the face of this situation, the central storage cotton company, a subsidiary enterprise of the China grain storage group, has increased the number of cotton reserves by adjusting the listed reserve cotton structure, increasing the intensity of reserve cotton inspection and adjusting the main body of cotton reserve pactions, thus ensuring the smooth operation of the domestic cotton market.

Adequate stock of cotton reserves is a "regulator" in the cotton market.

In order to digest inventory and reduce financial burden, China began to digest cotton reserves in an orderly way since April 2016.

From May to September 2016 and March to September in 2017, the two cotton reserves were started to be stocking, with a total volume of 7 million 370 thousand tons, with a total turnover of nearly 5 million 900 thousand tons.

In 2018, the sale of cotton reserves began in March 12th. The deadline was tentatively scheduled for the end of August, and 30 thousand tons of cotton were planned daily.

In May 16th, the main contract of Zheng cotton futures went through the first time limit this year.

In order to avoid the market's panic on the scarcity of high-grade cotton and guarantee the market supply of Xinjiang cotton, under the unified arrangement of China grain storage group, the China Cotton Storage Company immediately adjusted the structure of the reserve cotton brand, and increased the daily listing amount of Xinjiang cotton, which increased by 1 times compared with before, and guaranteed the purchasing demand of textile cotton enterprises.

In May 25th, the market price of cotton is still high, and the turnover rate of cotton reserves has reached 100% for many days.

In order to ensure the order of cotton reserves and meet the needs of textile and cotton enterprises, the China cotton storage company has issued the 720 thousand batch of third batches of public inspection plans for the 2017/2018 cotton reserve company, and ordered all units directly under the jurisdiction to coordinate the relevant storage units in the area, closely cooperate with the inspection institutions, intensify coordination and supervision, and resolutely complete the task of issuing public inspection.

In June 2nd, the announcement issued by the relevant departments on the relevant issues concerning the reserve cotton rotation in 2017/2018 pointed out that from the beginning of June 4, 2018 to the end of the current round of the year, the reserve cotton rotation business was restricted to the textile cotton enterprises only to participate in the auction, and only the self use of the enterprises was restricted, and the non textile cotton enterprises were stopped participating in the bidding.

Market analysts believe that when the price of cotton continues to rise, the departments concerned will adjust the main body of cotton reserves, which can stabilize market prices and protect cotton enterprises.

Traders banned the first day of the auction, and cotton prices showed a marked decline.

Cotton in storage as cotton

The main body of regulation has played a positive role in stabilizing market prices by increasing sales.

It has been nearly 3 months for 2017/2018 to carry out the orderly development of the national cotton reserve in the past 3 months. As of June 8th, the total planned storage of national cotton reserves in the 2017/2018 year was 1 million 890 thousand tons, and the total output from the warehouse was 1 million 226 thousand tons, with a turnover rate of 65%. The highest price of the paction was 17700 yuan per ton and the lowest price was 12700 yuan per ton.

Under the effective guidance of macro policy control, cotton futures and spot markets gradually return to reason.

Since the beginning of June, cotton prices have dropped significantly, and cotton prices have temporarily come to an end.

Industry experts believe that the placement of reserve cotton effectively fills the gap between supply and demand in the market, and plays a positive role in stabilizing the cotton market, stabilizing market expectations and suppressing excessive speculation.

With the cotton market becoming stable, the turnover rate of cotton reserves has returned to normal level.

Imported cotton can effectively compensate for gap between production and demand

The sale of reserve cotton has eased cotton supply in short supply to a certain extent in the short term, but it can not change the trend of cotton supply and demand in the long run.

It is expected that the domestic cotton production and demand will continue to grow in the next few years, the annual output of cotton will be 5 million tons to about 6000000 tons, and the consumption amount is about 8000000 tons, and the production and demand gap will be kept from 2 million tons to 3 million tons for a long time.

The supply gap is mainly due to the increase in the output of national cotton reserves and the increase in import quotas.

With the reduction of reserve cotton inventory, increasing import cotton to make up for the gap is an inevitable choice.

Mei Yong, general manager of China cotton information network, told the Economic Daily reporters that imported cotton can not only meet the needs of the domestic market, but also effectively reduce the price difference between domestic and foreign cotton, and maintain the competitiveness and vitality of the domestic textile industry in the international market.

Since China's accession to the world trade organization, in order to protect the interests of cotton farmers, a quota management system has been put in place for cotton imports, and import cotton quotas are divided into two categories: tariff quotas and tariff quotas.

China has issued 894 thousand tons of cotton tariff quotas annually, and the import tariff rate is 1%; the implementation of the quasi tax system for tariff quotas is based on the tariff quotas and the issuance of quasi tax quotas on the basis of domestic market demand. The import tax rate of cotton imports using sliding tariff quota is slightly higher than 1%, and the lower the price of imported cotton, the higher the sliding tax rate.

Since 2015, with the increase in the supply of cotton reserves, our country has stopped issuing quasi tax quotas for 3 years in a row.

It is understood that due to the reduction of reserve cotton stocks, the relevant departments clearly plan to increase the quota of imported cotton quasi tax this year and increase the quota of imported cotton next year, so as to ensure the supply of domestic cotton market.

Some people worry that a large number of cotton imports will affect the safety of domestic cotton industry.

Wang Li, a professor at Shihezi University in Xinjiang, believes that the shortage of domestic cotton will become a normal situation. In the case of low cotton stocks, we can only rely on international trade.

The import of cotton must be done in two aspects. On the one hand, it is necessary to relax cotton import quotas and reduce the sliding standard. The current 894 thousand tons quota standard is based on the supply and demand situation of cotton in 2004. It can no longer meet the needs of the current demand. On the one hand, we should improve the function of reserve cotton, play the role of reservoir regulating pool in the moderate utilization of international market and resources, and better balance the supply and demand of domestic cotton, and adjust the surplus and deficiency.

Effective supply capacity of domestic cotton

With the gradual warming of Xinjiang's weather, Xinjiang's cotton production has recovered steadily, and some of the more heavily damaged areas have been replayed.

Xinjiang Hami Daquan Bay Township Huang Lu Gang three teams of cotton farmers, Yin war has been planting cotton since 1999, after the ups and downs of the market, the cotton price volatility has been indifferent.

According to Yin war, wind disaster has a great impact on cotton planting in the northern part of Xinjiang. Their village is located in the eastern part of Xinjiang.

He planted 230 mu of high quality cotton this year. Now the cotton seedling height has grown to four or five centimeters, and the growth is very good.

If late weather conditions are normal and field management is strengthened, a good harvest should not be a problem.

Xinjiang is the main producing area of high quality cotton in China. Since the implementation of the cotton target price subsidy policy in 2014, China's cotton production has gradually gathered to Xinjiang and gathered in the Xinjiang area.

Cotton planting area in Xinjiang showed a recovery growth last year.

In 2017, Xinjiang's total output reached 4 million 82 thousand tons, accounting for 74.4% of the whole country, accounting for 60.4% of the total sown area. The total output of the two consecutive years accounted for more than 70% of the total. Xinjiang cotton has become the mainstay of domestic cotton supply.

Wang Li thought, with the

The guiding role is constantly enhancing and advocating the idea of high quality and high price. The awareness of industry and downstream market and quality consciousness are constantly enhanced. Farmers choose cotton varieties to pay more attention to marketability, and the ginning plants pay more attention to the subdivision level.

Especially with the pformation and upgrading of China's textile industry, the cotton production side has to pay more attention to cotton quality, effectively mobilize cotton farmers to improve cotton quality and expand the enthusiasm of cotton planting income, and the internal quality and efficiency of cotton have been effectively promoted. "Double 29" cotton has become the mainstream of the market, and the domestic cotton market competitiveness has also been restored.

It is understood that with the steady growth of cotton quality in China, the use of domestic cotton is also gradually increasing, which basically meets the needs of domestic textile enterprises.

In particular, cotton production in some main cotton producing areas of Xinjiang has been further improved from seed selection, cultivation mode, cotton processing and pportation. The high quality cotton has become the first choice for some medium and high end cotton spinning enterprises.