Yesterday, an announcement issued by China Cotton Reserve Management Co., Ltd. aroused strong attention from the domestic cotton market, especially futures investors. This is following the international cotton market’s US cotton rising limit during the domestic National Day holiday, and the domestic cotton market. After the rapid increase in the purchase price of Xinjiang seed cotton, another major factor appeared in the market that can have a decisive impact on cotton prices.
According to the reporter’s understanding, the “Announcement on the Release of the First Batch of Central Reserve Cotton in 2021” issued by China Cotton Reserve Management Co., Ltd. stated that in accordance with the requirements of relevant national departments, in order to promote cotton The market operates smoothly and meets the cotton needs of cotton spinning enterprises, and the first batch of central reserve cotton is organized to be released in 2021. Relevant matters are arranged as follows: (1) Time. October to November 2021. It will be launched from October 8th. (2) Quantity. During the launch period, in principle, about 15,000 tons will be released on each statutory working day, which will be dynamically adjusted according to market conditions and other circumstances. (3) Method. It is sold through public bidding in the national cotton trading market. (4) Price. The bottom price for listed sales is determined dynamically based on the market dynamics. In principle, it is linked to domestic and foreign cotton spot prices. It is calculated and determined by the domestic market cotton spot price index and the international market cotton spot price index with a weight of 50% each, and is adjusted once a week. (5) Notarization inspection. The China Fiber Quality Monitoring Center organizes notarized inspection based on 10% sampling of the released cotton reserves. Other matters, firstly, China Cotton Reserve Management Co., Ltd., the National Cotton Trading Market and the China Fiber Quality Monitoring Center will formulate implementation details for reserve cotton release, bidding transactions, notarization and inspection, etc., and publish them in advance through their respective official websites and the National Cotton Trading Market website Announced to the public. Second, the reserve cotton trading is limited to textile cotton companies participating in the bidding. If non-textile cotton enterprises participate in bidding in violation of regulations, the results will be invalid and their qualifications to participate in reserve cotton transactions in the future will be cancelled. The reserve cotton purchased by the textile cotton enterprise is limited to the enterprise’s own use (the unified social credit code or tax registration number of the bidding enterprise and the textile cotton enterprise must be the same) and may not be resold. Otherwise, once discovered, their qualifications to participate in reserve cotton transactions in the future will be cancelled. Third, if there are major changes in the domestic and foreign cotton markets during the release of the central reserve cotton, necessary adjustments will be made to the first batch of release arrangements according to the market regulation and control needs of relevant national departments, or the release of the central reserve cotton will continue to be arranged, and will be notified later.
Zhang Guoqiang, general manager of Heze Hongyi Industrial Development Co., Ltd., told reporters that during the domestic National Day holiday, the price of the main U.S. cotton contract increased by nearly 8%, and was once close to 114 cents/pound. The fierce rising market that has been rare for many years, coupled with the current high opening price of new seed cotton produced in Xinjiang in China, the purchase price in some production areas yesterday exceeded 11.5 yuan/kg, an increase of about 100% over the same period last year, which makes the majority of Cotton market entities and futures investors are very concerned about the future trends of prices. Therefore, the launch of the first batch of central reserve cotton in 2021 is of particular concern today. The focus of everyone’s attention is first, the selling price, and second, the quantity.
“In fact, there is no shortage of cotton in the domestic cotton market. The recent sharp rise in domestic cotton futures spot prices, especially US cotton futures prices, is a bit confusing.” Zhang Guoqiang said, After comprehensive analysis, the conclusions drawn are as follows: First, the U.S. cotton market has reached a time period when cotton import traders from various countries focus on pricing, and the probability of price hikes in the market is high. Second, there are increasingly obvious signs of easing and improving Sino-US relations in the near future. The market expects that China will increase its purchases of US cotton in the future, which will support the continued rise of US cotton prices in the future. Third, the market for newly produced seed cotton in Xinjiang has seen a “rush to harvest” phenomenon. The astonishing increase in the price of seed cotton will significantly increase the cost of lint cotton processing.
Yang Yong, chairman of Shanghai Yuan Trading Co., Ltd., believes that judging from the current market development trend, the negative impact on the market of the first batch of central reserve cotton starting today will be reduced. There are many discounts. The key reason is that the “root” of the current rise in domestic cotton prices lies in the upstream market. Although increasing the supply of lint cotton in the market meets the needs of textile companies and others, it cannot “cure” the “disease”. However, judging from the content of the announcement, the relevant agencies will make adjustments at any time according to changes in the domestic and foreign cotton markets during the release of central reserve cotton. After the first batch of central reserve cotton is sold off, it is not ruled out that they will continue to arrange the release of central reserve cotton. In the market, under the premise of increasing supply, the irrational rise in cotton prices will eventually be curbed.
“My family and I are very happy. We planted 2,400 acres of cotton this year, and we earned about 4 million yuan in net income at least.” Sister Zhu, a major cotton grower in Hutubi County, told reporters, More than 500 acres of the 2,400 acres of cotton have been picked. The average yield per mu for the first round of picking is 410-420 kilograms. It is estimated that the yield for re-picking will be 30-40 kilograms per mu. Although the yield per unit area is not as good as expected, the price is gratifying.
According to the reporter’s understanding, all the cotton picked by Sister Zhu was sold to Hutubi County Yunlong Cotton Industry Group Co., Ltd., with a selling price of 11.2 yuan/kg. Sister Zhu said that the cotton picked by her family was a little too moist. The reason why cotton is sold to Yunlong Cotton Industry Group is mainly because the company provides good services to cotton farmers in terms of cotton planting, field management, etc., and also automatically increases prices for cotton farmers at any time according to market changes. “The company has good conduct.” Let cotton farmers trust it very much.
“As early as the cotton planting season, we made a detailed analysis of the development trend of the cotton market. We encouraged cotton farmers to expand planting area and strengthen field management, and provided them with deferred payment and price Cheaper than the market, mulch films, fertilizers and other agricultural inputs, as well as a full set of agricultural machinery services.” Chen Zhiman, general manager of Hutubi County Yunlong Cotton Industry Group Co., Ltd. told reporters that after the new seed cotton produced in northern Xinjiang came on the market, the purchase price was getting higher day by day. Yesterday The highest purchase price of some ginning mills has reached 11.6 yuan/kg, and the lowest is 11.1 yuan/kg. Up to now, about 40% of the cotton in northern Xinjiang has been picked, and the yield per unit area of individual cotton fields has dropped significantly. From the analysis of the reasons for the production reduction, on the one hand, some cotton was planted relatively late, resulting in insufficient maturity of the cotton. On the other hand, more bad weather also affects the growth of cotton. From the perspective of total output, if the factor of reduced area is added, the current situation is not very optimistic.
Yan Xu, a cotton purchaser in Tiemenguan City, told reporters that the output of some cotton fields was indeed lower than expected. The first picking yield of low-yield fields was only 380 kg/mu. Overall, cotton has more sterile seeds, and some cottons have lower maturity, resulting in lower cotton boll weight.
“At present, the purchasing price of machine-picked cotton in Nanjiang is 10.7-10.8 yuan/kg (moisture content and impurities are within 12% and below).” Yan Xu said that the current purchasing price of ginners Seed cotton no longer pays much attention to clothing points, and basically one price per car. As the purchase price continues to rise, the risks borne by the cotton ginning mills are still increasing.
Zhang Guoqiang said that from September 29 to yesterday, the average increase in domestic cotton yarn prices was around 2,000 yuan/ton, and the downstream market still has a certain ability to withstand the increase in cotton. But whether it can be transmitted smoothly in the future is still uncertain. It is also understood that cotton in Xinjiang is in its peak period, and cotton in northern Xinjiang is being harvested by machines on a large scale. However, there is currently significant snowfall and cooling in some areas, which is expected to affect cotton picking.
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