Recently, large fluctuations in cotton futures spot prices at home and abroad have attracted market attention. Among them, Zheng Cotton’s main 2309 contract price has risen from the bottom on March 27. As of April 14, the highest increase has reached more than 1,000 yuan/ton. In the future How will cotton prices behave?
Prior to this, a survey of cotton farmers’ planting intentions conducted by relevant agencies showed that my country’s cotton planting area is likely to decrease in the new season. After the announcement of the new policy, Xinjiang and the mainland’s cotton-producing areas are currently in the critical period of spring sowing. The expected level of cotton prices will definitely determine farmers’ intentions to plant cotton. What choices will cotton farmers make? How to judge the rise and fall of cotton prices in the future?
Intention to plant cotton in new season declines
In February this year, the China Cotton Association conducted the second phase of the 2023 cotton planting intention survey among a total of 1,975 designated farmers in 10 cotton-producing provinces and regions across the country and the Xinjiang Production and Construction Corps. The survey results show that the intended cotton planting area in 2023 has further declined compared with the first phase of the survey. In this survey, the area of intention to plant cotton nationwide was 42.1196 million acres, a year-on-year decrease of 3.7%, and the decline was 2.7 percentage points larger than the previous period. Among them, the area of intention to plant cotton in Xinjiang is relatively stable, with a slight decrease of 0.5% year-on-year, basically the same as the previous period; in the mainland cotton area, due to the larger year-on-year drop in sales price in 2022 and the increase in cotton planting costs, cotton income has dropped significantly year-on-year, and at the same time compared with Xinjiang Compared with cotton areas, there are no subsidies, so the enthusiasm of mainland cotton farmers to plant cotton continues to decline. The intended area for cotton planting in the Yellow River Basin and the Yangtze River Basin decreased by 17.8% and 30.3% respectively year-on-year, expanding by 6.6 and 23.1 percentage points respectively from the previous period. Among the cotton farmers surveyed, 15.7% had unknown intentions for cotton planting; the largest proportion was the same as last year, at 66.1%; 15.0% were planning to reduce the cotton planting area; 3.2% were planning to increase it.
According to a survey by the China Cotton Association, the average income from cotton planting in Xinjiang in 2022 is only 58.4 yuan per mu (excluding target price subsidies), a year-on-year decrease of 97.1%. The main reasons for the cotton planting area to remain basically stable are: First, stable cotton The target price policy guarantees the income from cotton planting; secondly, cotton planting is highly mechanized compared to other crops, which reduces labor costs. The decline in cotton planting intentions in some areas is mainly due to the increase in water costs caused by the reduction of local water resources and the increase in water prices. At the same time, cotton planting has been reduced in some non-cotton-friendly areas. The main reason for the hesitation in planting intentions is that the amount of cotton subsidies in 2022 has not yet been allocated, and the new round of target price policies in 2023 has not yet been announced. Cotton farmers are unsure and their planting intentions are unclear.
On March 30, at the eighth meeting of the fourth council of the China Cotton Association, relevant professionals analyzed the situation of this year’s cotton market from the perspective of cotton seed companies and cotton farmers.
First, from the perspective of the seed sales market, the overall cotton planting area will decline in 2023, and the decline in the mainland will be greater than that in Xinjiang. Among them, the area in Xinjiang decreased slightly, mainly due to the decrease in cotton area caused by the policy increase in grain area. This year’s seed sales market started later than in previous years. In addition, the decline in the Corps was greater than that in the local areas, mainly because the Corps’ grain area was better implemented. For example, some cotton fields of a certain division had already been planted with wheat last fall, while in southern Xinjiang, because the cotton purchase ended late, the policy implementation was not So it’s in place, and it was only partially implemented this spring. The cotton area in the Yangtze River Basin is declining at a relatively fast rate. The survey data should reach more than 30%. This is mainly caused by the poor efficiency of cotton planting. It is mostly replaced by soybean crops. The management of soybeans is less labor-intensive than cotton. In the Yellow River Basin, the cotton area has declined faster than in the Yangtze River Basin. It is mainly affected by the income from growing grains. According to the survey, the decrease is more than 40%. It is basically replaced by corn and wheat, because the income of these two crops is lower. Far greater than the income of one season of cotton.
Second, from the perspective of growers, it should be unprofitable at the current market price. In Xinjiang, cotton prices dropped significantly last year, but land rent, agricultural supplies, and water fees did not drop. Especially land prices, in some areas Instead of falling, it rises. Low cotton prices cannot support high land rent, high agricultural inputs, and high water costs. The income from cotton planting in 2023 is not optimistic in Xinjiang. However, there are currently no other good crops to choose from in Xinjiang. Cotton farmers can only grow cotton. If Alternative crops have been found, such as soybeans, peanuts, corn, and wheat. If the problem of rapid planting is solved in terms of varieties, it may have a considerable impact on the cotton planting area. In the Yangtze River Basin and Yellow River Basin, compared with corn, wheat, soybeans, etc., cotton has no competitive advantages in terms of cultivation technology, degree of mechanization, economic returns, completeness of the industrial chain, national policies, etc. Cotton farmers can only choose other options. Grow crops that save labor, trouble, and yield good returns.
Third, from the perspective of national policies, food security is the first priority. This year, not only are there huge profits from growing grain, but subsidies are also arriving on time, while the distribution of cotton subsidies is relatively lagging behind.
The target price remains unchanged for three years and its impact
On April 14, the National Development and Reform Commission and the Ministry of Finance issued the “Notice on Improving the Implementation Measures of the Cotton Target Price Policy.” With the approval of the State Council, the cotton target price policy will continue to be implemented in Xinjiang and implementation measures will be improved.
Currently, all parts of the country are in a busy period of spring plowing and sowing, and most cotton farmers are very concerned about information related to cotton subsidy policies. This time the country announced in a timely manner andImproving the cotton target price policy in Xinjiang is a “reassurance” for cotton farmers. It is more conducive to changing the wait-and-see mentality of some cotton farmers and will reverse the decline in cotton planting area in the new season to a large extent.
Cotton is an important strategic material. The issue of clothing and feeding our country’s 1.4 billion people must be in our own hands. We cannot be “choked” by foreign suppliers at the “critical moment” and continue to use “subsidies” to encourage farmers to grow cotton. Maintaining the basic cotton planting area in the main cotton-producing areas will help stabilize and protect our country’s “cotton” Safety”.
“Judging from the price of 18,600 yuan/ton, it is the same as the price in the previous three years. It has a positive effect on stabilizing the continuity of cotton prices. It also gives cotton farmers a positive signal to ensure stable income from cotton planting.” Cotton cultivation in Korla City Lao Yan, a big business owner, told reporters that it can be expected that as the state steps in to stabilize output and prices, the cotton market supply is expected to be sufficient in the next three years, and price fluctuations are expected to stabilize, which will play a positive role in the balanced development of the upstream and downstream cotton industries.
Under the current market conditions, after the new policy is announced, what are the key factors that determine the rise and fall of cotton prices?
“At present, the main 2309 contract price of Zheng cotton is around 14,900 yuan/ton, which is about 3,000 yuan/ton different from the Xinjiang cotton target price of 18,600 yuan/ton. Will the spot cotton price in the future move closer to the ‘policy price’?” The state improves Xinjiang After the cotton target price policy was announced, many investors who did not fully understand the operating mechanism of my country’s cotton market put forward their own opinions. In fact, the state’s policy of improving Xinjiang’s cotton target price is mainly related to cotton farmers, but has a relatively small direct impact on cotton prices. The target price is mainly to protect the income of cotton farmers from falling. It has little to do with the rise and fall of cotton market prices, but it will affect market psychology. Some market professionals believe that when cotton prices are still in a relatively low price zone, it is definitely inappropriate to pursue a large number of short positions.
In the long term, there is a supply gap in my country’s cotton market. When downstream demand and cotton product exports improve in the future, domestic cotton prices will be closely linked to international market trends. The current market operation situation of U.S. cotton and other major cotton producing countries in the international market The correlation with the country is still relatively high.
Data from the China Cotton Information Network shows that as of April 13, 2023, in the 2022 cotton year, a total of 1,074 cotton processing enterprises across the country processed cotton and conducted notarized inspections in accordance with the requirements of the cotton quality inspection system reform plan. The inspection quantity was 27,642,887 packages and the inspection weight was 623.36 Thousands of tons. Among them, 973 processing companies in Xinjiang inspected 27,170,290 packages with an inspection weight of 6.1279 million tons; 101 processing companies in the Mainland inspected 472,597 packages with an inspection weight of 105,700 tons. Judging from these data, although my country’s cotton planting area will decrease in 2022, due to the increase in unit yield, my country’s total cotton output will increase that year. At the same time, Xinjiang’s cotton output will account for an increasing proportion of the market. If the new policy can If more Xinjiang cotton is allowed to stabilize the cotton planting area or even expand planting, then my country’s new season cotton yield and total output prospects are estimated to be more optimistic.
Wang Lei, a cotton merchant in Xinhe County, Xinjiang, said that his company has completed planting 12,000 acres of cotton, and the area is the same as last year. According to him, some areas in Xinjiang have reduced cotton planting areas this year, mainly in areas that are less suitable for cotton planting. Under normal circumstances, Xinjiang’s annual cotton output ranges from 5.3 million to 5.5 million tons, but last year it reached 6.15 million tons. At present, cotton sowing has begun on a large scale in southern Xinjiang, but it has not yet fully started in northern Xinjiang. Due to the strong guidance of policies related to cotton planting this year, it is expected that farmers will not easily switch to other crops.
</p
