"Cotton market does not support the rise of cotton prices, production costs upside down", "this year's peak season is not prosperous, the market is more wait and see", in the face of this year's cotton prices continue to rise in the market environment, a number of textile industry insiders told reporters.  

Insiders said that the current enterprises rely on cotton production, no inventory had to stop watching.   Take Henan, the second largest province in yarn production, for example, the golden autumn peak season starts production capacity or only half.   Analysts have linked the high price of new cotton to a sharp decline in cotton acreage this year, which is expected to ease next year.  

The new cotton price exceeds 16,000 yuan/ton

September 30, the end of the sale of cotton reserves, new cotton has become an important source of continued production of textile enterprises.   Cotton futures prices continue to be high, the State Reserve cotton has repeatedly been snapped under the background, Xinjiang new cotton high prices.

"National Day small holiday period, Xinjiang cotton prices soared, driving the whole cotton market with the rise.   Now the price of Xinjiang hand-picked lint has exceeded 16,000 yuan/ton, and the price of Xinjiang machine-picked cotton has also reached 15,500 yuan/ton."   Li Jifeng, secretary general of Henan Textile Industry Association, revealed that after the replacement of old and new cotton, the cotton cost for textile enterprises increased significantly over 2000 yuan/ton compared with August.   The price soared to 15, 800 yuan per ton, even though traders still had stockpiles of cotton from the State Reserve.   At present, the upstream cotton prices rise, the downstream demand is not prosperous, cotton yarn enterprises clip in which, in the face of huge production pressure.  

As of October 9, the purchase price of seed cotton in southern Xinjiang was about 7.60 yuan/kg, and the higher purchase price reached 8.00 yuan/kg in Kuqa, Weili and other places of Aksu.   Driven by the price of cotton in Xinjiang, the price of seed cotton in the Yellow River Basin also reached 7.30 yuan/kg during the National Day, up 0.15 yuan/kg compared with the pre-holiday period.  

"Cotton acreage has shrunk significantly this year, in addition to the end of the round of reserve cotton, Zheng cotton futures recently rose rapidly, and other factors have led to the recent rise in cotton prices."   Zheng Bo, a cotton analyst at Zhuochuang, said cotton prices were low in early October last year when a large number of new cotton came on the market.   After the beginning of this year, cotton prices began to pull up significantly.   Therefore, cotton farmers have late selling price high, early selling at a loss to sell psychology, psychological expectation of higher cotton prices.   In addition, despite the extension of the selling period this year, the turnover rate of the reserve cotton round at the end of September continued to reach 100%, which indicates that textile enterprises and traders are also generally concerned about the cotton supply in the future.  

It is understood that it is rainy and windy in southern Xinjiang this year, and the recent hail disaster in Korla, Xinjiang, has affected the growth of cotton. The market of machine-picked cotton and hand-picked cotton has been delayed by 7 to 10 days compared with previous years.   After the end of the cotton reserves, the market cotton supply appeared short "empty window period".   The National Meteorological Center recently predicted that the total cotton output this year would fall by 9.1% to 5.096 million tons.

"Cotton is plentiful abroad this year and the price is down.   If this kind of internal and external price difference continues, the imported yarn is bound to have an impact on China's cotton yarn market."   Li Jifeng believes that at present most textile enterprises are afraid to buy high cotton, are waiting for prices to fall.  

The cotton industry is in a weak season

Gold nine silver ten, the weather turns cool, it is the prosperous start of cotton spinning enterprises, production and marketing two prosperous season.   However, with cotton prices high this autumn, Zhu Minfeng, head of Huapeng Cotton Industry Co., Ltd. in Xiayi County, Henan, is not optimistic about the market.

"At present, Henan Nanyang Xinye area is the worst-hit areas, the operating rate or only about 20%.   In Xiayi County, Shangqiu, the average operating rate is only 50 percent."   Zhu says his textile factory is one of the few in the neighborhood that is operating at full capacity, and that it is supported by the "grain reserves" he keeps in warehouses when cotton prices are low.

"At the current price of cotton, there is no profit at all for the textile enterprises, and even the cost is inverted. Who will dare to buy cotton production?"   A person in charge of the textile enterprises revealed that if the price of Xinjiang cotton is now 16,000 yuan/ton, plus the loss rate, electricity labor cost of 5,800 yuan/ton converted, the cost of producing a ton of general comb 40S cotton yarn has reached 24,200 yuan/ton.   At present, the market price of Pulsi 40S is about 23,000 yuan/ton, and the cost is 1200 yuan/ton.

Zhu Minfeng said that although the cost of cotton rose, the price of spinning enterprises could only rise by 50 yuan to 100 yuan per ton this year due to unsupported demand from downstream cloth enterprises, which could not make up for the profit loss caused by the soaring cost.   Nowadays, the spinning enterprises are spinning how much cotton on the hand of the state, dare not start work rashly.   While Zhu Minfengtun has enough cotton to last until November, some of his peers have only a few days. In spite of this, Xinjiang's new cotton turnover is still at a low level, more inquiry, less patted to buy, we are waiting and seeing.

Zheng Bo also said that according to Zhuo Chuang data statistics, the current cotton market is in a state of no market price.   In this year's cotton prices rise significantly, Jiangsu and Zhejiang area of medium-sized enterprises have been early to take the national cotton reserves, cotton enterprises may be able to support until November.   However, inland provinces such as Henan rely on Jiangsu and Zhejiang provinces for sales, and the production and marketing environment is not good, so it is difficult to survive in the high cotton price environment.

Since the beginning of this year, raw materials, labor and other costs of the rise, has made the textile industry on the margins of a serious impact.   According to the National Bureau of Statistics, as of June 2016, the number of China's textile enterprises with operating income of more than 20 million yuan was 19,937, a decrease of 2,547 compared with 22,484 in 2011.   In the first half of 2016, the net profit of listed spinning enterprises also continued the downward trend of the previous three years, and the net profit decreased by more than 10% year-on-year.

The industry calls for a dual-track system for cotton supply

Cotton price trend closely affecting the textile enterprises.   Before that, nearly 150 cotton textile enterprises in Hubei, Shandong, Hebei, Zhejiang and Guangdong had complained to the China Cotton Textile Association about the problems of cotton storage by telephone or by writing in joint names.   The relevant departments of the state increased the daily release of cotton reserves to 30,000 tons per day, and the dumping of cotton reserves, which was originally scheduled to end on August 31, was extended to September 30.   August, September, cotton prices had a correction.

"Tun cotton is like speculating in the stock market, to buy high is a loss." Zhu Minfeng regrets that the cotton market is greatly affected by news and policies, and as a bulk commodity, it is often hyped by traders. Cotton prices fluctuate between high and low, and textile enterprises are deeply affected. At present, the textile industry calls for the increase of national reserve cotton and new cotton to be put into the market at the same time, forming a dual-track situation to solve the situation of high cotton prices.

However, for this view, Zheng Bo thinks the feasibility is not high.   She said that although the State Reserve had 7 million tons of cotton in stock, if a large amount of cotton was dumped into the market, it would cause a sharp drop in the price of cotton and hurt farmers.   Only stable cotton prices, textile enterprises can develop healthily.   She analyzed that due to the collapse of corn prices this year and the higher profit of cotton planting, the domestic cotton planting area will expand next year, which will push the cotton price lower.