Cotton Price "Hard" Rise Or Trigger Rise In Clothing Prices

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 18165 yuan / ton in July this year.

Obviously, China's large cotton traders have found golden opportunities for making money in the recent round of "high fever" of agricultural products.

Big business hoarding cotton speculation

A large Zhejiang

The above cotton textile business people revealed that this year, the sales profit of 32 cotton yarn is generally 5000 to 6000 yuan / ton, which is considered by the industry to be the highest level in 10 years.

And in 2009, the sales profit of cotton yarn was only 500 - 1000 yuan / ton, and the company only maintained its profit.

Quite a few of these gains have come from hoarding.

Under the stimulation of high returns, cotton textile enterprises have also reached a record high level this year.

A person who did business consulting for several cotton textile enterprises told reporters that most of the cotton spinning enterprises are mostly hoarding cotton, while cotton yarn is mostly stored in cotton yarn traders and dealers.

"The whole operation is nothing more than hoarding first, and then trying to raise the price."

He said that the scale of the required funds has made small cotton spinning enterprises unable to participate in the "feast".

Actually, since last year.

The ongoing 600 thousand tons of cotton reserve auction, the paction price is basically 18200 to 18300 yuan / ton, far higher than the government set the auction price of 16500 yuan / ton.

"In recent years, large cotton producers have basically taken away all the funds previously invested in real estate and used them for cotton speculation."

The above said that although the industry decided to take part in the cotton speculation or the capital in the industry, there were also some hot money in Zhejiang and other places through some consulting investment companies to gain profits.

At the beginning of this year, the Xinjiang Zhejiang chamber of Commerce estimated that at least 10 billion of Zhejiang's private capital withdrew from Shanxi coal mines and domestic real estate to Xinjiang's cotton market.

Subsidy policy has not yet been fully utilized.

Despite the hype, the number of people interviewed in the industry attributed the sharp rise in cotton prices to supply and demand.

Wang Qianjin, an analyst at the first textile network, said that the speculation of capital merely exacerbated the imbalance between supply and demand in the cotton market.

Gao Fang, Secretary General of the China Cotton Association, once analyzed that the cotton production estimated by the industry and government departments in this year (September 2009 to August 2010) is estimated at around 7 million tons, and the consumption estimate is between 9 million 500 thousand and 10 million tons.

The cotton shortfall of this year is about 3 million tons, which needs to be compensated by import or policy reserve.

{page_break}

In fact, the statistics of cotton supply and demand in China have been very controversial. The estimate of supply and demand gap ranges from 3 million tons to 5 million tons, but the fact that cotton production in 2009 is a fact.

Ma Junkai, Secretary General of the Dezhou Cotton Association of Shandong, told reporters that in 2009, cotton production in the Dezhou area was close to 30% (compared with normal years). In addition to the weather, the cotton producers found that the yield of cotton seeds was less than that of wheat and corn in the past two years, resulting in the reduction of cotton planting area.

The survey just completed by Ma Junkai shows that when the new cotton comes into full market in October, if the purchase price of seed cotton can not exceed 3.7 yuan per catty, it means that the income of farmers in this year is still not as good as that of grain. Next year, the cotton planting area will continue to shrink.

Because cotton is included in cash crops and does not enjoy the market support policy of wheat, corn and other food crops, the minimum protection price policy for cotton farmers is also far from being expected.

Du Min, a researcher at the Ministry of agriculture's Rural Economic Research Center, said that in fact, China's accession to the WTO allows China to implement less than 8.5% of the subsidy for cotton, which is estimated to be about 5 billion to 6 billion yuan per year.

Unfortunately, this subsidy is far from enough. In 2009, for example, the government only invested a total of 1 billion 300 million yuan in cotton seed subsidy.

Or trigger a wave of price rises.

Ling Fangcai, chairman of Guangdong textile import and export Limited by Share Ltd, said that the rise in cotton prices has already had a great impact, which will directly affect the production costs of enterprises, which will lead to a decline in corporate profits and a decline in the competitiveness of enterprises.

According to Pan Rihui, Secretary General of Dongguan textile and garment industry association, in fact, cotton prices have been rising for nearly a year.

As cotton accounts for about 40% of the total clothing cost, according to estimates, cotton prices rise by 5%, and corporate profits will drop by 2%.

It is worth noting that at present, the profits of China's textile industry are very thin, even less than 3%, so once cotton prices rise sharply, enterprises can only choose to raise prices.

But in the context of the global economic downturn, consumers are trying to tighten their wallets, and it is difficult to raise prices.

Dongguan Humen international cloth trading center responsible person Huang Yihong told reporters that since last October, cotton will gradually show the momentum of price increases.

With the change of the peak season and the output of cotton in the textile and garment industry, cotton prices will change to varying degrees every year and every quarter, but this year's price is soaring.

"Unexpectedly, the price will rise so much, so fast."

Huang Yihong said.

"Now is only the beginning of winter and autumn garment manufacturing, and one or two months ahead is the real demand season."

According to Mr. Shaw, head of a weaving enterprise in Humen, a large demand is bound to result in higher prices, and clothing prices have become inevitable.

He Weihong, owner of Dongguan ice crystal Clothing Co., Ltd., said that the data are pretty good and the prices of materials are rising, so the service companies can pfer costs through the terminal price increase.

He predicted that the apparel price increase in the second half of the year will be at least 15%.

Post market prices remain high

"Cotton prices fall in limited space, and then the market trend, we should take into account the weather factors and downstream demand and many other aspects."

Guang Fa futures analyst Liu Qingli told reporters.

"From the perspective of demand, the global economy is in the process of recovery, and our textile exports are gradually recovering, and the demand for cotton is expected to continue to rise steadily."

According to USDA7 forecast, cotton production in China will reach 7 million 185 thousand tons in the next year, and consumption will remain at 10 million 669 thousand tons, with a difference of 3 million 484 thousand tons and a shortfall of 218 thousand tons.

Next year, domestic cotton shortage is mainly supplied by imports.

COFCO futures analyst Li Jiagui said, but at present, there is not much reserve for national cotton reserves, and the possibility of throwing it in the next year is almost zero, and once the cotton price is lowered, the storage and storage measures will start immediately.

Therefore, next year, China's cotton shortfall will rely heavily on imported cotton. 1/3's demand for cotton needs to be offset by imports.

In this way, the initiative of cotton prices will be more controlled by foreign businessmen and the domestic regulatory room will be narrowed.

Li Jiagui also pointed out that even if the weather conditions are good in late period and the cotton production is high next year, the global cotton inventory consumption ratio will still linger in the low position.

In addition, China's cotton gap is still at a high level, and domestic and foreign cotton does not rule out a situation of linkage rise.