The Cotton Price Is Too Large Or The Domestic Cotton Market Will Continue To Be Integrated With The International Market.

The cost of cotton in the long run is higher than that of international competitors, and the decline in orders is forced to weaken the demand for domestic cotton which is much higher than the international cotton price.

Since 2011/2012, cotton price difference at home and abroad has become the focus of the cotton market.

Throughout the year, spreads continued to expand and expand.

International

According to the US Department of agriculture's latest report in August, 2011/2012 has 26 million 700 thousand tons of cotton output and 22 million 900 thousand tons of consumption, with a stock ratio of 64.3%.

Apart from China, the two largest cotton producing countries in India and the United States have their own characteristics.

India cotton competitiveness enhancement

According to US Department of agriculture data, 2011/2012 cotton production in India increased by 5 million 800 thousand tons in the year of 2011/2012, an increase of 100 thousand tons compared with the same period last year, which has been increasing for a continuous period of 3 years.

In the whole year, domestic consumption is 4 million 500 thousand tons. With the rapid growth of domestic textile industry demand, it has shown a steady growth trend in recent years.

The total export volume in the whole year was 2 million 200 thousand tons, an increase of about 70% compared to the same period last year. As for domestic cotton traders in India, export profits exceeded domestic sales and export volume exceeded expectations. The government of India issued a policy restricting cotton exports to ensure the growing demand for cotton in China.

While exporting a lot, India's textile industry needs to import small quantities to meet domestic production demand.

Generally speaking, the domestic cotton prices in India are much lower than the domestic cotton prices in China. There is a certain volatility in the export price of our country, which is affected by the fundamentals of supply and demand, export policy and exchange rate.

In 2011/2012, with the advantage of price and geographical location, the number of India's cotton exports to China exceeded that of the US.

According to the data of China's General Administration of customs, by the end of June 2012, the total number of cotton exported to India in 2011/2012 was 1 million 860 thousand tons, up 207% over the same period last year, which is about 700 thousand tons higher than that in the United States.

The competitiveness of India's cotton in the international cotton market has been increasing.

Pressure on US cotton exports

The US Department of agriculture's latest report in August showed that 2011/2012 cotton production in the United States was 3 million 400 thousand tons, down 500 thousand tons compared with the same period last year.

In the whole year, US cotton consumption was 700 thousand tons, a decrease of 100 thousand tons compared with the same period, and the export volume of 2 million 600 thousand tons, reaching the lowest level in the past 4 years.

2011/2012 US cotton and India cotton to China's export CNF main port quotes trend chart

According to the data of China's General Administration of customs, by the end of June 2012, the total amount of cotton exported to China in 2011/2012 was 1 million 170 thousand tons, an increase of 14% over the same period last year.

Facing the competition of cotton in India and other countries, the US export pressure as a net exporter of cotton has been increasing, which is much higher than that of India cotton in the beginning of the year. However, the difference between the two countries has shown a decreasing trend in the latter part.

As China and India are the two largest cotton consuming countries, and the state uses cotton policy as a means of regulating the cotton market, the impact on export prices is also greater. Therefore, the US cotton traders are interested in China and India.

Especially concerned.

Domestic

According to the data of relevant departments in China, cotton production in China increased over the previous year in 2011/2012, and consumption was about 10 million tons.

For China's cotton market, 2011/2012 is a relatively special year. Under the influence of the global economic environment, China's cotton purchase and storage and quota policy, and the operation of cotton spinning enterprises in China, the domestic cotton market mainly presents the following characteristics:

In the case of State purchasing and storage policy, the amount of storage in 2011/2012 was 3 million 130 thousand tons, and the domestic market resources were less than in previous years.

In the whole year, the price of the national reserve market supports the spot market price, and the cotton price is stable during the storage period. After the end of the purchase and storage, the cotton price has a downward trend overall.

The price difference between domestic and foreign cotton has been too large. The price difference between domestic and foreign countries calculated by the average price of domestic 328 grade cotton and the Cotlook A index is no more than 1000 yuan per ton from the beginning of the year, and the difference is 3800 yuan at the end of 2011. The difference between June and then is 5300 yuan.

The cost of cotton production in cotton mills has been higher than that of international competitors for a long time, and the decline in orders has forced the weakening of domestic cotton demand which is much higher than the international cotton price.

In order to reduce the cost of cotton, cotton textile enterprises in China increased the demand for imported cotton and increased the proportion of imported cotton in production.

Prospects for next year

According to the current situation, there are many uncertainties in the cotton market in 2012/2013.

The main concerns are as follows:

The global supply of cotton is relatively adequate.

In the latest report of August, the US Department of agriculture predicted that the output of 2012/2013 will be 24 million 800 thousand tons, a decrease of 7.1% over the previous year, and consumption of 23 million 500 thousand tons, and the inventory ratio will reach the highest level of 69% in history.

China and India are expected to reduce production.

As India's market exports exceeded expectations in 2011/2012 and increased domestic demand, India's cotton export policy in the new year will become one of the influencing factors of international cotton prices.

Domestic cotton purchasing and storage policy will still support spot prices, and domestic cotton prices will be too large or will continue.

According to the prediction of relevant departments, domestic cotton processing enterprises tend to pay for storage, and domestic market resources are limited, especially high-grade cotton.

For cotton spinning enterprises, concerns

Changing factors, judging cotton price trend, making good use of cotton production plan and reasonably controlling cotton inventory and cost will be an important and arduous task in 2012/2013 cotton spinning enterprise management.