So far, last season’s cotton picking has ended, but cotton sales are not booming. Even though a large amount of domestic cotton is unsaleable and the domestic market seems to be saturated, news about cotton imports is still endless. For many cotton-using companies, they seem to prefer to purchase imported cotton, which has also caused difficulties in selling domestic cotton to a certain extent. This kind of game is not just an example this year, it has been a topic of discussion in the cotton market for a long time.
Why do we still need to import cotton when domestic cotton is unsaleable? Why is the price of imported cotton still lower than that of domestic cotton after adding many high costs such as tariffs?
According to many scholars, the fundamental reason is that China’s fragmented production has hindered the development of China’s cotton industry. There is also the fact that our country has no better way to improve the gap in high-grade cotton.
Just compare cotton production in the United States and you can see the disparity and cost points. There are only more than 1,800 cotton farmers in the United States, each with a cotton farm of 10,000 to 20,000 acres, while a large number of cotton farmers have a cotton farm of 70,000 to 80,000 acres, or even a dozen acres. Such a scale promotes the mechanized production of cotton and greatly reduces the production cost of cotton.
There are 30 to 40 million cotton farmers in our country, that is, nearly 100 million cotton farmers are planting cotton. The disadvantage of labor costs is obvious. Each household only has dozens or hundreds of acres of cotton fields, which makes it more difficult for mechanized and large-scale production. Not only cannot the quality and yield of cotton be guaranteed, it also increases production costs.
Such an industrial structure seems to us to be powerless, and it is even more difficult for each cotton farmer to change the industrial structure and industry status quo. Cotton farmers can only increase their family income and quality of life by increasing their own cotton production and seeking other ways to generate income.
As the domestic cotton processing and warehousing work in 2016/17 gradually comes to an end, the market’s focus begins to shift to cotton consumption and whether there is a gap in the supply of high-grade cotton in 2016. We are bullish on the cotton market in the first half of 2017 because the 2015/16 , 2016/17 are highly similar, and most cotton-related companies are persistently waiting for cotton prices to rise sharply. Judging from the quantity of warehousing and public inspection, it is a high probability that Xinjiang’s cotton output will exceed 4 million tons in 2016. However, the problems of short lint length and low breaking strength in the middle and late stages are still prominent; coupled with this year’s high-grade and high-quality Corps Cotton is sold early, and the uncertainty in the cotton market in the second half of this year is still great.
So what kind of cotton will textile companies need from February to August 2017?
1. The expectation of high-quality “Double 29” and “Double 30” cotton gaps has weakened
On the one hand, the possibility of trade wars between China and the United States, China and Japan, and China and Europe has increased. High tariffs, anti-dumping, and trade barriers may be frequently used. Textiles and apparel, as a major export earner, cannot be “independent”, and export growth is not optimistic; on the other hand, On the other hand, with the rapid growth of yarn spindles in India, Vietnam, Pakistan and other countries, the technical level of workers has improved, equipment has been updated, and the proportion of cotton yarn above 40S is getting higher and higher, which has an impact on China’s high-count yarn, high-count and high-density gray fabrics and fabrics, and clothing exports Increase, for example, the recent sales of PV yarn and 40S and 60S pure cotton yarn in Pakistan are good, and the price of pure cotton combed yarn has increased by 2-3% month-on-month.
2. Medium-quality lint cotton spinning 21-40S carded and combed yarn will still be in demand (not “double 29/double 30”)
According to customs statistics, my country imported 176,800 tons of cotton yarn in November, a year-on-year increase of 12.13%. Among them, the import of low- and medium-count yarns increased significantly, indicating that the procurement and demand focus of my country’s weaving factories and middlemen is still on low- and medium-count yarns; In the 2016 reserve cotton rotation, except for a small amount of imported reserve cotton in 2011 and 2012, such as Corps cotton, which can be used as cotton for spinning cotton yarn with a count of 50S and above, more than 80% of the cotton rotation resources can only spin 40S and below carded and combed cotton. yarn, but the enthusiasm of textile companies to participate, bid, and take delivery of goods is high; in addition, the inadequacy of real estate cotton in terms of breaking strength, length, etc. in 2016 may amplify the supply pressure of medium-quality cotton. Spinners and traders will still reserve cotton rounds Buy as you go and restock as you go.
3. Low-grade and low-quality lint cotton, except for “wadding”, is basically “give up”. It is better to “fall into the bag as soon as possible”
Recently, the Pakistani government plans to spend US$1.8 billion to stimulate textile and apparel exports. Among them, clothing export tax rebates account for 7%, finished products account for 6%, processed fabrics account for 5%, and yarn and gray fabrics account for 4%. At the same time, the import tariffs and sales taxes on cotton and textile machinery and equipment are canceled (since January 1, 2017 Since the implementation), the costs of spin mills and exporters have dropped significantly. The export competitiveness of carded yarn, combed yarn and siro spinning yarn below C32S has been rapidly improved. India, Vietnam and other countries have also introduced…With the follow-up of the stimulus policy, most of my country’s OE yarn and cotton yarn markets below 21S will fall. Low-grade and low-quality lint cotton is a hot potato. In addition, the reserve cotton rotation is fully covered in low, medium and high grades. Traders Market entry operations are more cautious.
</p
