“Last year, ginners in northern Xinjiang opened scales to purchase new seed cotton mostly on September 17, and in southern Xinjiang on September 26th. This year we have ushered in the autumnal equinox, but ginneries across Xinjiang are still standing still. ‘. Is it true that cotton ginning factories are ‘fearful of being bitten by snakes for ten years’?” Wan Yuejiang, an agricultural product trader in Changsha City, Hunan, asked this question.
According to the reporter’s understanding, as of now, the “Two Lakes” region and inland cotton areas such as Henan, Hebei, and Shandong have entered the final stage of picking new season seed cotton. However, new season seed cotton in Xinjiang has not yet begun large-scale picking. An important player in the market – ginning. The factory chose collective “silence”. Has the cotton gin factory gotten rid of the “problem” of rushing to open scales and rush to buy in previous years? What changes will happen to the seed cotton market in the new season?
What is the reason for the delay in starting up the cotton gin factory?
“The delay in starting scale acquisitions of cotton gins is indeed due to last year’s panic buying losses. Most manufacturers are more rational in their acquisitions this year. In addition, some unexpected factors in the market have also prevented them from starting as planned.” A cotton gins factory in Shihezi City, Xinjiang The person in charge said that the epidemic is still recurring in some areas of Xinjiang, and the flow of workers has been affected to a certain extent, and the workers in some ginning plants have not yet been fully staffed. At the same time, some cotton ginneries have not yet found third-party funding, and individual cotton ginneries have not yet been chartered. In addition, in order to cooperate with local epidemic prevention and control, even private cotton ginning factories are unwilling to take the lead in opening scales and purchasing. Newly produced seed cotton will be launched in large quantities soon. At this time, everyone is more willing to wait and wait until it is safe before purchasing with confidence.
Industry insiders told reporters that relevant agencies currently attach great importance to the acquisition of newly produced seed cotton, and have made reasonable arrangements on how to standardize acquisitions, ensure quality and quantity, and pay cotton payments in a timely manner. Relevant financial institutions such as agricultural policy banks have also We strongly support ginners to open up acquisitions. It is expected that the acquisition of new seed cotton this year will be relatively stable, and ginners will also make rational acquisitions.
It is understood that in the new year, financial institutions will have stricter management and requirements for acquisition funds. They will not only focus on reviewing the qualifications of industrial enterprises, but also significantly increase the proportion of acquisition deposits. The release of relevant funds is also estimated to be based on The acquisition progress is carried out in an orderly manner, which is conducive to maintaining the stability of the acquisition price.
Uncertainties in new cotton market increase
On the 23rd, the China Cotton Association released a new monthly report on China’s cotton situation. Relevant information shows that since the 2021/2022 year, affected by many factors such as the epidemic, the Russia-Ukraine conflict, and the sharp increase in U.S. dollar interest rates, the domestic cotton industry has been operating under pressure, the textile market has been sluggish, consumption has declined, and inventories have increased. According to statistics from the China Cotton Association, domestic cotton consumption in 2021/2022 was 7.3 million tons, a year-on-year decrease of 13.4%; total cotton production was 5.774 million tons, a year-on-year decrease of 2.5%; import volume was 1.728 million tons, a year-on-year decrease of 37.1%; ending inventory was 8.32 million tons, a year-on-year increase of 2.1%. Entering the 2022/2023 year, due to the influence of internal and external factors, poor sales of cotton produced in the previous year resulted in large cotton inventories, and new cotton acquisitions tended to be cautious; orders from textile companies were less than expected, and the overall industrial chain was running weakly.
The China Cotton Association predicts that the trend of “low demand and relatively abundant supply” is likely to continue in 2022/2023. From a demand perspective, considering that domestic consumption has recovered after the epidemic eased, domestic cotton consumption demand is initially forecast to be around 7.6 million tons, a year-on-year increase of 4.1%; from a supply perspective, the country’s total output is approximately 5.92 million tons, a year-on-year increase of 2.6%; Import volume and export volume remained stable at 1.7 million tons and 30,000 tons respectively; the ending inventory was 8.31 million tons, basically the same as the same period last year.
Wan Yuejiang said that judging from the development trend of the new cotton market, supply pressure will exist for a long time. The key factor is that there are currently no signs of substantial changes in future demand. For example, Europe and the United States are still strengthening the import review of my country’s cotton and its products. , Domestic demand recovers slowly in the short term. At the same time, the global economic situation is unclear and the energy crisis will have an adverse impact on the cotton market.
Ginning plant acquisitions are becoming more rational
“Once bitten by a snake, you will be afraid of the rope for ten years.” When the inventory of old cotton is large and the market demand is weak, the acquisition of ginners has become more rational. In addition, the China Cotton Association has issued an initiative at the recently held national cotton situation analysis meeting, suggesting that cotton purchasing and processing enterprises should summarize the experience and lessons of the previous year, strengthen their awareness of business risks, rationally formulate purchasing strategies, reasonably determine purchase prices, and consciously maintain market order. . In addition, macroeconomic control policy suggestions and enterprise risk management suggestions were also put forward.
Judging from the current opening prices of new seed cotton ginners in individual areas of Xinjiang, although mainstream prices and representative prices have not yet appeared, the probability of the purchase price of new seed cotton opening at a low price is higher, or opening at a low price and moving at a low price. Information from “Yimiangou” shows that a ginning factory in Wujiaqu, Xinjiang purchased 12,000 kilograms (net weight) of new seed cotton from a cotton farmer yesterday, with a settlement amount of 61,200 yuan, or a unit price of 5.1 yuan/kg. Relevant information also shows that this batch of newly produced seed cotton is of good quality, with a sweater score of 40.8% (the official clothing score is 36.58%) and an impurity content of 10.4%.
Teacher Zhang, a senior cotton researcher in Ningbo, Zhejiang, said that if the clothing content is 37% and cotton seeds are calculated at 3 yuan/kg, the new product purchased by the ginnery in Wujiaqu, XinjiangThe production cost of seed cotton and lint cotton is 11,070 yuan/ton (gross weight).
Some professionals said that with the rational acquisition of cotton ginning plants, the mentality of market entities, especially traders, to gamble on the market outlook is far lower than last year. Under the current circumstances of difficulty in repaying loans and raising working capital, companies are facing current and future operating pressures. larger. In addition, the fierce competition between cotton farmers and ginners expected by the market is unlikely to occur, because all parties have a relatively clear understanding of the current market situation. During the global economic downturn, stable operations are the top priority.