Cotton prices rise and fall dramatically in the textile industry

A few months ago ushered in the "30,000 yuan era" of cotton prices, has recently fallen to the lowest national reserve price. The ups and downs of cotton prices have caused heavy losses in the textile industry. Textile companies, especially small and medium-sized enterprises, have increased their inventories, have little demand, and have difficulty in relieving business conditions.

The report of the Institute of Cotton Research of the Chinese Academy of Agricultural Sciences released by the website of the China Cotton Association stated that the entire cotton industry scenario was more severe and complex than the financial crisis. It is predicted that this year will be the turning point in the end of the “golden period” for the textile industry, and a batch of cotton spinning companies have to stop production or close down.

In July, the cotton spot market fell sharply. The average spot price of the spot cotton spot market for the Grade 3 property was 23,927 yuan ton at the beginning of the month, and the average price at the end of the month was 2,003 yuan ton, a decrease of 15.89%. ** Market, Zhengzhou Commodity Exchange cotton 1109 contract fell from 34,000 yuan in February to 21,000 yuan, a decrease of nearly 40%. In the international market, the price of October ** on the New York Intercontinental Exchange reached a maximum of 164.64 cents in April, and it fell below 100 cents to the end of July, a similar drop of nearly 40%.

It is understood that from September 1, 2011 to March 31, 2012, relevant departments will implement preliminary cotton storage and storage plans in 13 major cotton producing provinces (autonomous regions and municipalities) including Xinjiang and Shandong, and the temporary storage and storage price will be standard. The price of lint to warehouse is 19,800 yuan per ton. According to industry sources, 19,800 yuan is the lower limit for the price drop of cotton, and the period of time falling below this level will be relatively short.

In the rise of the prices of bulk agricultural products since last year, cotton has played a role as a “wind vane”. From September to early November last year, the price of domestic and foreign cotton rose by more than 67% in less than two and a half months. After the return of the cotton price to the fundamentals, the contradiction between “necessity for production” still persisted. In February this year, the price of cotton rose again and entered the “3 million era”.

It is expected that the spot price of cotton will continue to weaken in the future, but the space for further downside is limited. Under the support of rising costs, supply and demand gaps, and cotton's minimum purchase price of 19,800 yuan, the long-term trend of cotton prices is a slight rebound in stability.

Xu Wenying, vice president of the China Textile Industry Association, believes that last year's cotton prices rose sharply. The entire textile industry has achieved good results both upstream and downstream, and the textile industry has achieved the best sales in history. However, this increase is not a rigid demand for the textile industry but a "false demand."