Xinjiang’s cotton target price reform subsidy is in its third year this year. This policy was introduced at that time to reduce the large backlog of inventory during the state’s cotton reserve period, bring domestic cotton prices in line with international cotton prices, and achieve a soft landing of cotton prices. Now that cotton purchasing season has come again, how is this year’s cotton harvest? What’s the price? What kind of accounts do cotton growers and purchasing and processing companies have? Let’s take a look at the investigations conducted by industry insiders in Xinjiang.
After the autumn harvest, cotton farmers began to settle big accounts, but Xinjiang cotton farmers were never happy. In an interview with CCTV, a cotton farmer said bluntly: If the state does not provide subsidies, cotton cultivation will be a loss and no money will be made! This is true even for cotton farmers in Xinjiang, not to mention small cotton farmers in the mainland.
According to data from the National Cotton Market Monitoring System, domestic cotton prices in 2016 increased by a thousand yuan year-on-year.
If cotton farmers don’t make money, then will cotton spinning companies make money? No, cotton is not as simple as you think!
On the 18th, a person in charge of a mainland contracting company in Aksu said that starting from the beginning of November, the purchase price of seed cotton was 7.3-7.4 yuan/kg, and the cost of lint was as high as 16,000-16,100 yuan/ton. Current sales are still cost-inverted. The following cotton prices are If it continues to fall, the losses to the company will be immeasurable.
At present, the sales price of high-quality C40S cotton yarn in Hebei, Shandong, Henan and other places is 24,500-24,800 yuan/ton. Spinners are not “upside down”. From the perspective of spinning costs and market trends, the cotton price of 16,000 yuan/ton has become a “watershed”.
Recently, the cotton yarn quotations of mainland textile companies have increased with the cost of raw materials rising from 14,500-15,000 yuan/ton to 15,800-16,500 yuan/ton, while the cotton yarn quotations have been raised to 300-500 yuan/ton. Some large factories have reported an increase of 600 for combed yarn and compact spinning yarn. -800 yuan/ton, the risk of rising raw material prices is accelerating to be passed to downstream.
From this point of view, the entire cotton spinning industry chain is not doing well! Why do all links in the domestic cotton spinning industry chain dare not say that they are doing well despite the fact that the state has given so many subsidies? Because cotton is not as simple as you think!
Afterword
In summary. The cotton market has been fully internationalized. Whoever produces cotton with good quality and low cost will make money. The cost of cotton cultivation in China is high, which directly affects the competitiveness of the entire industry including processing, sales, and cotton spinning. The competitiveness is not strong, the market voice is not strong enough, and the price rebounds occasionally, it cannot change the situation of losing more and earning less.
If China wants to make money from cotton, the key is to reduce the cost of cotton planting by increasing the mechanization rate, increasing technology development in variety research and development, field management and other aspects, and creating conditions for the use of cotton pickers, which is a very effective way to reduce costs. Only when the competitiveness of the entire Chinese cotton industry improves can cotton farmers become winners in international competition and earn more money.
