The price of cotton 2014 fell

2014 was a turning point in China's cotton industry policy. The first document at the beginning of the year clearly stated that the principle of market pricing should be adhered to, and a target price system for agricultural products should be gradually established. The interim cotton purchase and storage system lasted for three years. The central government began piloting target price subsidies in Xinjiang and fixed subsidies in nine provinces in the Mainland. Hua Li, cotton market analyst Li Li believes that the most obvious change brought about by the policy adjustment is in the price.

Li Li: "This collection and storage policy ended on March 31. His storage price is still 20,400 yuan, so the spot price at that time is basically a lot lower than 20400, which is probably about 18,000 yuan. Around, but after the conclusion of such a collection and storage policy on March 31st, the cotton price has been falling all the way to the current level of about 13,000. "

One ton of cotton fell from 20,000 to 10,000. This huge drop was cited by Sun Liwu, an analyst at Zhuo Chuang Information Market, as “a cliff-type decline”. Market conditions were “opened by a knife” and the “Icefire is a two-fold phenomenon” was staged. - During the 2013/14 cotton season in the first half of the year, there was a bottom for storage, and the price of cotton was high and the fluctuation was small. In the second half of the 2014/15 cotton season, a target price policy was adopted, and cotton prices were low and volatile.

Sun Liwu: "Then as of December 18th, the average domestic cotton price monitored by Zhuo Chuang was 13,,507 yuan per ton, a year-on-year decline of 30.79%, setting a new low in five years. The price of seed cotton is relatively low, and the cotton farmers' reluctant selling mentality is relatively strong. The sales of seed cotton are relatively slow. As of late December, sales of seed cotton in Xinjiang have basically ended, while the progress in the mainland is only about 50%.

The decline in cotton prices to farmers has not only the irritated feeling of “not wanting to sell” but also the low will of “not wanting to plant”. In Huimin County, Binzhou City, Shandong Province, thousands of years of cotton have been planted and are now being abandoned by more and more farmers. Plant grower Dong Xinmin said:

"A little economical or labor-intensive cotton is not planted, 90% of which are not planted. We only produced 300 jins last year, and only 4.2 yuan a pound was more than 1200 bucks. This year's production is good, 600 came. Jin, but the price is not enough, basically no species by 2015."

In fact, no matter whether it is temporary storage or target price subsidies, the policy explicitly mentions “effectively guaranteeing the income of farmers”. Although the policy was changed, the farmers in Xinjiang and the nine provinces in the Mainland can still receive subsidies. Why are we still unwilling to plant cotton? Sun Liwu, analyst at Zhuo Chuang Information Market, believes that:

“The target price is a measure of compensation for the producer and does not guarantee that the producer can increase income, but it can basically protect his interests. Then in early December, the first batch of subsidies in Xinjiang, an average of 191 yuan per mu, has been issued. However, during the implementation process, there are also a number of problems, and the relative timing of the subsidy payment by the state may not be very consistent with the time point at which cotton farmers actually used the funds. From the mainland's situation, there is no subsidy until the fourth quarter. In the initial period, the country issued a quota of 2,000 tons for nine provinces in the Mainland. Farmers finally came to this government subsidy. As of now, only the Anhui Province has issued implementing regulations in accordance with the actual planting area of ​​cotton and the per mu subsidy standard. However, the amount of subsidy received by cotton farmers is about 0.3 to 0.4 yuan per kilogram, which is actually a drop of nearly 20% compared with last year. The actual income of cotton farmers, especially the comparative earnings, is a sharp drop.

From this point of view, even if subsidies are added, the income is not as high as it was in the era of storage and storage. However, Sun Liwu said that the high price of purchasing and storage is itself an unsustainable price higher than the international market. To make the cotton industry embark on the path of sound development, it is bound to reform the price mechanism. Not only should the policy move forward in the process of exploration, but the upstream and downstream sectors also need to be adapted and adjusted again, which means that in the short term, cotton Industry shocks are inevitable.

Having experienced this year's "clumping style" decline, will next year's cotton prices continue to bottom out or slowly pick up? Hua Li, market analyst Li Li believes:

"It is because the country has collected a lot of cotton in its inventory in the past three years, and it has not consumed too much. This year's new cotton production market is estimated to reach 6.1 million tons. This part of cotton is all in this market for circulation. The amount of inventories is too large, and the international market is also a pattern of oversupply. Therefore, in the new year, it is the price of the entire market that is not very optimistic next year. He believes that one of his increases is not very large. The individual is expected that the price of cotton next year may be between 12 and 15,000, which is such a shock."

China's total cotton stocks account for 47% to 50% of the world's total, which is undoubtedly an important pressure to curb price increases. In the present period of reform, how should cotton farmers grow cotton? Sun Liwu, analyst at Zhuo Chuang Information Market, recommends:

"If we continue to grow cotton, we must strengthen this field management and plant high-quality cotton. Since these two years, higher quality cotton is relatively scarce. In this next year, disposable high-grade cotton is relatively scarce. Part of the cotton for cotton companies, whether it is for the production of some high-value-added products of the cotton enterprises, is a relatively high demand, so we must produce high-quality cotton, high-quality cotton.