Cotton Prices Soar Import Cotton Quota Increase

The second batch of the year Imported cotton Quotas were partly issued this Monday.

In response, a local development and Reform Commission responded that it had not received any official documents.

According to a textile industry who has recently participated in the China Cotton Development Summit Forum held in Sanya, the information conveyed at the meeting shows that the government has determined that the total volume issued under this round of quotas will be 1 million tons, and will be issued on a phased basis and the first batch will be issued 500 thousand tons in advance. The government loosened up 1 million tons of import quotas to make up for the market supply gap before the launch of new cotton in September. According to the research summary of China Cotton (information market) association, as of the end of April this year, the number of domestic commercial cotton stocks is still less than 1 million 800 thousand tons, about two months of cotton consumption, and 4 months from the new cotton market, and there are still two months or so of cotton consumption.

　　 cotton Demand exceeds supply

The news of the recent quotas on imported cotton quotas has been widely circulated in the industry since last weekend. The China Cotton Association also hints on the official website: "the country's recent issuance of part of the quota is quasi tax import quota. Cotton enterprises To meet the needs of the textile industry. " However, no specific quantity was mentioned in this announcement.

At the end of 12 last year, the ministries and commissions of the NDRC signed the first batch of 1 million 894 thousand tons of imported cotton quota in 2010, including the 894 thousand tons tax rate of 1% of the tariff quotas and the 1 million ton tax rate of slightly higher quasi tax quotas.

This quota has actually consumed more than half of it. According to statistics from the General Administration of customs, China imported 1 million 170 thousand tons of cotton in 1-4 this year.

Hebei Fangyuan textile printing and dyeing group obviously felt that it was not easy to buy cotton this year. The cotton stock of the company could be reduced from the past two weeks to the present 7 days. The 120 thousand spindles cotton mill needs to consume about 60 tons of cotton every day.

Starting in March, cotton prices began to rise rapidly, and financial pressure forced many textile enterprises to adjust their inventories. A recent survey conducted by a high-level member of Shandong's Shandong cotton group found that the larger the scale of enterprises is, the more obvious the inventory adjustment is. "In the past, large textile enterprises usually stored 2-3 months of cotton production to ensure normal production and operation, but now the stock availability of large enterprises is generally not more than 1 months."

China's cotton price index showed that the price of standard cotton rose from less than 15000 yuan / ton in February to 16638 yuan / ton in May.

Gao Fang, Secretary General of the China Cotton Association, said at the above Sanya forum that the output of cotton and cotton in this year (September 2009 -2010 August) is estimated to be around 7 million tons. As for consumption, the Cotton Association estimates that the number of cotton will reach 9 million 500 thousand -1000 million tons, and that the government will have about 10 million tons.

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

Hot money speculation

The speculation of idle capital is also considered as one of the reasons for soaring cotton prices.

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

Du Yuzhou, President of the China Textile Industry Association, also mentioned this phenomenon at the Sanya forum. He said that not only the cotton, but also the hot money has begun to hype the cotton yarn. "Now some knitting factories have to consider building their own cotton mill." The limited funds of enterprises are not used for upgrading the industrial chain, but for dealing with the speculation of cotton and cotton yarn, this is a waste.

The decentralization of import quotas is difficult to shake up the current cotton price. First textile network analyst Wang Qianjin said that in fact, after the news of the second batch of quotas released last weekend, China's cotton price index is still rising slightly. The international market has predicted that China will also increase imports. The rise of the international cotton price in the early stage has already digested this factor.

In fact, imported cotton that has won at a low price has little advantage at present.

A cotton spinning enterprise in Guangdong told reporters that the price of the cotton and the domestic cotton of the same quality was 17000 yuan -18000 yuan / ton, and the price difference was not obvious. Previously, the price of imported cotton was generally 1000 yuan or even 1500 yuan per ton cheaper than domestic cotton. Gao Fang believes that this is also a reflection of the current high cotton price is determined by the fundamentals of supply and demand rather than speculation.

Avoid becoming the next "soybean"

In fact, observations of recent years data show that China's annual import volume of about 2000000 tons of cotton has occupied about 1/3 of the supply.

The report of the Ministry of agriculture's Rural Economic Research Center, Oxfam and other agencies jointly wrote "the resumption of the Doha Round negotiations in 2009 - China's cotton industry is still struggling." it is believed that the opening of the market after China's accession to the WTO led to a sharp increase in China's cotton imports, and that in 2008, China's cotton imports were 19.5 times that of 2001. The external dependence of cotton is also increasing. In 2002 -2007, cotton imports accounted for 20.2% of China's total consumption, reaching 31.7% at the highest.

Will cotton become the next "soybean"? At present, China's soybean import dependency exceeds 70%, and the whole industry is almost monopolized by foreign capital.

Du Min, a researcher at the Ministry of agriculture's Economic Research Center, who has long been concerned about the cotton industry, said that during the WTO negotiations, the government had calculated the cotton industry model. Research shows that if the external dependency of cotton exceeds 40%, it may seriously affect employment and other indicators.

From cotton to textile and apparel, the industrial chain absorbs more than 100 million of the employed population.

The impact seems to have begun to emerge. According to the above report, in 2002 -2008, the profits of Chinese farmers' cotton planting per mu decreased as a whole. The survey found that cotton farmers had to cut down all kinds of family expenses, such as medical treatment, education and social interaction, so as to minimize the cost of living as cotton income was hard to maintain.

Du Min said that although the industry has been calling on the government to introduce a minimum protective price measure for cotton farmers to protect the farmers' enthusiasm for planting cotton, but this policy of benefiting farmers has not yet been issued. The idea of minimum protection price is to determine the minimum purchase price according to the production cost. When the market price is higher than this price standard, cotton farmers can sell freely. Once the market price is lower than this standard, the government is responsible for purchasing cotton according to the protective price.

Du min recently went to the cotton main production area. Although the purchase price was very high last year, the purchase price of seed cotton was generally around 3.2 yuan / kg. Cotton growers still indicated that this year would reduce planting area or increase planting area, because in 2008, seed cotton purchase price dropped to 1.8 yuan / Jin, and cotton growers even broke even.

According to the agreement on accession to the WTO, China's allowance for less than 8.5% of cotton is permitted, and the upper limit of this subsidy is estimated at 5 billion -60 billion yuan per year. In fact, this subsidy is far from enough. In 2009, for example, the government invested a total of 1 billion 300 million yuan in cotton subsidies. Although about 2000000000 of them were allocated for collection and storage, the good harvest was not transmitted to cotton farmers. As the most important cotton importer in China, the United States subsidized cotton growers 1 billion US dollars every 2008 -2012, including more than 600 million dollars of cotton farmers.