USDA: China Cotton Target Price Or Below

The US Department of agriculture (USDA) analyzed in 2015 Agricultural Outlook Forum that the main factors affecting global supply and demand in 2015/16 will remain China's output, inventory and import policies.

According to USDA, from the current situation, the target price of Xinjiang in 2015 may be lower than that of 19800 yuan / ton in 2014, but the policy may be later than the sowing of cotton. Therefore, it will not have an important impact on the planting area of Xinjiang. The cotton planting area in Xinjiang is expected to only decrease slightly.

In contrast, the subsidies for the the Yellow River Valley and the Yangtze River Valley in this year are much lower than those in Xinjiang, and there are multiple planting options. The cotton planting area in these areas is expected to be reduced by 25%.

However, because cotton production per unit area in Xinjiang is much higher than that in the mainland cotton area, China's cotton output is estimated to be 6 million 90 thousand tons, down 6.7% from a year ago, and the drop is much lower than that of cotton planting area (11%).

In addition, China's cotton consumption is expected to grow at 8 million 160 thousand tons, up 5.6% over the same period, and imports of 1 million 520 thousand tons, down 4% from the same period last year.

USDA believes that the Chinese government will carefully control the stock of reserve cotton, so that domestic cotton prices will stabilize at 13000-14000 yuan / ton, because the fall in cotton prices will increase spending on subsidies.

At the same time, China's cotton inventories in 2015/16 may decline for the first time in five years. USDA expects China's total cotton inventory to be 13 million 470 thousand tons, down 4% from the same period last year, accounting for 58% of global inventories.

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Most enterprises begin to work at the end of the Spring Festival holiday. Some cotton enterprises and textile enterprises have begun to resume work, but the atmosphere of the Spring Festival is still in the market.

Xinjiang cotton quotation is stable.

A ginning factory in Akesu reflects that fewer enterprises are starting up at present, and the purchase price of seed cotton has dropped to 4.2-4.5 yuan / Jin. The seed cotton sale is almost over. Although the ginning factory has started, the purchase is basically unlimited, and the enterprises mainly sell lint.

On the 25 day, the selling price of leather grade 2129, 3128 and 4128 was 14300 yuan / ton, 13700 yuan / ton, 13400 yuan / ton respectively, and the overall price level was unchanged before the Spring Festival holiday.

At present,

Most cotton ginning mills have a large stock of cotton, and a cotton mill in Akesu has more than 7000 tons of cotton in stock, and intends to move to the mainland in the near future.

3128 grade hand picked cotton has been moved to Shandong and Jiangsu.

14000-14300 yuan / ton, 2128 level offer 14300-14400 yuan / ton, all before the Spring Festival, and almost no sales record in the near future.

The financial pressure of Xinjiang ginning factory increased after several years. Some enterprises increased their financial costs through social financing, plus the need to pay warehousing, storage, pportation and loan interest and warehousing costs to the mainland.

Up to now, most farmers in Xinjiang area,

The planting units still did not purchase materials such as cotton seeds, plastic film, fertilizer, pesticides, and so on. Especially, some Uygur farmers had low enthusiasm to purchase agricultural materials before launching in April.

First, cotton farmers' income in 2014 is not high; two, domestic cotton prices are expected to remain low in 2015.

The market is expected to reduce cotton planting area by more than 10% in Xinjiang next year.

The the Yellow River river basin is in a "sting" state.

As of 25, Hebei, Shandong, Tianjin and other places are still immersed in festive atmosphere.

On the same day, Mr. Li, owner of a 400 type cotton ginning factory in Xiajin, Shandong, said that their factory plans to start work after ten in the beginning of the month, which has been postponed for 3 days compared with previous years.

According to him, after the Spring Festival this year, the local ginning factory is still "no action".

The reason is: first, there is not much seed cotton in the market, and the quality is poor, which is not attractive to the ginning plant. Two, the current stock market is not good enough, especially the purchasing attitude of textile enterprises is negative, and the cost of enterprises is "upside down".

On the same day, Shandong, Binzhou, Dezhou and other places 3128 class real estate cotton price 12900-13100 yuan / ton, 4128 level 12400-12500 yuan / ton, continue to quote before the Spring Festival.

At present, most of the 400 type cotton ginning plants have low stock of lint, generally below 100 tons, and some ginning plants are at 500-600 tons.

Some ginning plants reflect that after the Spring Festival, they will no longer buy seed cotton and sell mainly lint.

The market expects that the cotton price in the the Yellow River River Basin will be divided after the first ten days of March. First, the price of quality Xinjiang cotton, real estate cotton and imported cotton will rise, of which grade 2129 Xinjiang cotton will rise to 15000 yuan / ton; two, the general quality cotton, Xinjiang hand picked cotton and India Chen cotton will continue to go down, of which 2227 grade real estate cotton price is around 12000 yuan / ton.

The quantity tax reduction of the ginning plant in the Yangtze valley.

Up to now, market participants in Hubei, Jiangsu and Anhui in the Yangtze River Valley have been greatly reduced after the Spring Festival.

On the 25 day, the head of a 400 type ginning factory in Wuhan, Hubei, Niu said that they still had 210 tons of lint on hand, and that they would no longer buy and process after they were sold out.

According to him, after more than 70 years, the local cotton ginning mill estimated that the normal operation will be below 10.

First, before the Spring Festival, most factories ended up losing money, and cotton processing industry was not profitable. It became a common understanding. Two, the cotton area in the Yangtze River Basin had been greatly reduced, and most of the ginning plants had "no rice under the pot".

It is reported that at present, the acquisition of cotton in the Yangtze River Basin has completed more than 80%. After that, the quantity of cotton is small and the quality is poor.

Some market people expect the cotton planting area of the Yangtze River Valley to fall by more than 30% in 2015.

"Now cotton planting in the Yangtze River Valley has no attraction."

A ginning factory owner said: first, the mainland does not enjoy the preferential policy of "differential subsidy" in Xinjiang. For the mainland cotton farmers, the weaker the market is, the greater the loss. The two is the oversupply of cotton resources. Only from about 10000000 tons of state cotton stocks, according to the current market consumption ability, it can basically meet the textile industry's two-year use. It is expected that domestic cotton prices will not improve in 2015, and cotton growers will have a way out for other crops.