New cotton is about to be launched, and it may be difficult to sell cotton in the new year

At present, the 2022 cotton purchase and storage has been launched for nearly a month. As of August 9, the cumulative transaction volume of central reserve cotton purchases and sto…

At present, the 2022 cotton purchase and storage has been launched for nearly a month. As of August 9, the cumulative transaction volume of central reserve cotton purchases and storage was 58,480 tons. China Cotton Reserve Management Co., Ltd. previously announced that in accordance with the requirements of relevant national departments and the arrangements of China Grain Reserve Management Group Co., Ltd., in order to promote the smooth operation of the cotton market, China Cotton Reserve Management Co., Ltd. will launch the first batch of central grain reserves in 2022 on July 13. The reserve cotton is rotated in, and the end time will be determined in a timely manner based on market conditions, purchasing and storage conditions, etc.

According to the announcement, this round of purchase and storage will be carried out through open bidding transactions through the national cotton trading market. The total purchase and storage volume is 300,000-500,000 tons. In principle, the daily listing quantity will be arranged in a balanced manner and dynamically adjusted. The maximum price for purchase and storage bidding (delivery price) is dynamically determined based on the domestic cotton spot price on the previous working day (see the attachment for specific calculation formulas), and the start/stop price is set. The current domestic cotton spot price on the current working day is lower than 18,600 yuan/ tons (inclusive), start purchasing and storing, and stop purchasing and storing when it is higher than 18,600 yuan/ton. The transaction objects are limited to cotton target price reform processing enterprises determined by the Xinjiang Uygur Autonomous Region and Xinjiang Production and Construction Corps in 2021/2022.

When new cotton comes on the market, beware of “difficulties in selling cotton”

New cotton will be launched in September. Under the situation of declining domestic and foreign economic growth and increasing uncertainty in the international trade environment, the demand for cotton has declined, and it is very likely that “it will be difficult to sell cotton”, which will harm the interests of cotton farmers. Early coordination is needed. Ensure the stable development of my country’s cotton industry.

In 2021, domestic fertilizer prices will generally rise. According to research, the cost of cotton agricultural inputs has increased by about 50% this year, to about 300 yuan per mu. The land transfer fee is 800-1,200 yuan per mu, an increase of 200-300 yuan compared with the previous year. Due to rising oil prices in the future, cotton picking costs will also rise. It is generally estimated that the cost of cotton production this year will increase by at least 500-600 yuan per mu compared with the previous year, an increase of about 20%.

Under the influence of the supply and demand situation, from January to July 2022, the average monthly price of domestic standard grade cotton 3128B grade cotton dropped from 22,530 yuan per ton to 17,366 yuan, a decrease of 22.9%. At present, the spot price of 3128B grade cotton has dropped to 16,000 yuan per ton, and the main contract settlement price of Zheng cotton futures is 14,780 yuan per ton. From the perspective of production, due to the good cotton prices last year and the high enthusiasm of farmers to plant cotton, my country’s cotton area has increased steadily and slightly year-on-year this year. It is expected that new cotton output will exceed the previous year. In the current situation where cotton supply is sufficient, demand is difficult to improve, and cotton prices continue to fall, the price of new cotton may not be optimistic.

Considering that the cost of cotton planting has increased significantly this year and cotton processing companies are generally strapped for funds, there may be a “difficulty selling cotton” phenomenon in the new year. It is recommended to make plans as early as possible to ensure reasonable returns for cotton farmers.

First, formulate new cotton purchase and storage plans in advance to give full play to the regulating role of the state reserve on the domestic market. In view of the possible decline in cotton consumption and difficulty in selling cotton this year, it is recommended that relevant departments take overall consideration, formulate a cotton purchase and storage plan for the new year in advance, and initiate national cotton purchase and storage when necessary, balance domestic cotton supply and demand, and stabilize the domestic cotton market and Production.

The second is to carefully arrange the sliding quasi-tax quota for cotton next year. In order to stabilize domestic cotton prices, it is necessary to comprehensively consider the domestic cotton supply and demand situation, trade conditions and other factors in the new year. On the one hand, it is necessary to ensure that the demand for foreign cotton of export enterprises is met, and on the other hand, it is necessary to avoid the impact of foreign cotton on domestic cotton consumption. It is necessary to carefully determine The timing, scale and import structure of the cotton sliding tax.

The third is to strengthen support for downstream textile enterprises. Strictly implement the policies introduced by the country in April to stabilize foreign trade and foreign investment, effectively reduce the burden on domestic textile companies with operating difficulties in terms of corporate income tax, social security, water use, electricity consumption, etc., provide preferential loans, guide the expected recovery of the domestic cotton consumption market, and maintain The cotton market is healthy and stable.

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Author: clsrich