Market Observation: New Cotton Is Coming, Should Cotton Price Be Reduced

 

 

Some cotton related enterprises believe that the factors leading to cotton processing enterprises to raise prices and rush to collect seed cotton in 2021 / 22 are as follows:

 

First, the planting area and yield of Xinjiang will decrease slightly in 2021 / 22;

 

Second, the cotton processing line in Xinjiang has been growing continuously since 2018, resulting in an increasingly unbalanced capacity and seed cotton production, and a serious excess of ginning capacity;

 

Third, in recent two years, cotton ginning plants have been rushing to buy, but zhengmian has given cotton related enterprises the opportunity to get rid of the set;

 

Fourth, the Agricultural Development Bank, agricultural commercial bank and other commercial banks have increased the support of purchasing credit, and the phenomenon of "money and cotton" is very obvious; Fifth, driven by the rising prices of chemical fertilizer, plastic film, pesticide and other agricultural materials in 2021, the cost of cotton planting for farmers will increase significantly compared with the previous two years.

 

In 2021 / 22, the purchase price of seed cotton has become a common consensus among cotton and cotton textile enterprises. From cotton farmers, ginning plants to cotton traders, they are preparing for seed cotton harvesting and weighing, which also gives people a sense of irrationality. It is suggested that Xinjiang cotton processing enterprises should increase the price and control the risk in 2021 / 22.

 

So how to cool down the rush purchase of seed cotton in 2021 / 22?

 

It can be considered from the following three aspects:

 

First, we should strengthen the management of credit funds, issue guidance prices, and strengthen the audit and inspection, so as to reduce credit support or even stop loans for cotton processing enterprises that destroy the guiding price and increase prices without permission;

 

The second is to monitor and forecast the prices of Zheng cotton and Zheng yarn, strengthen the linkage supervision of the spot market, and severely crack down on the illegal behaviors such as excessive speculation, bid up prices, hoarding and so on, so as to better promote the healthy development of Zheng cotton industry. Under the premise of "hanging upside down", the cotton ginning plants and cotton traders will be restricted;

 

Third, the government departments should increase policy and information guidance to avoid the sharp rise and fall of seed cotton purchase price and lint sales price, so as to ensure the stability of cotton planting area in Xinjiang, maintain farmers' income and the development of cotton textile enterprises.