Cotton is a strategic material related to the national economy and people's livelihood, and it is also the second largest crop after grain. Cotton has high utilization value and is known as "the whole body is a treasure". It is not only the most important fiber crop, but also an important oil crop, a high-protein food crop, a raw material for textiles, fine chemicals, and an important strategic material. Cotton involves the two major industries of agriculture and textile industry. More than 200 million farmers across the country are directly involved in cotton production. In addition to cotton farmers, there are also a large number of downstream cotton-using companies such as textile companies who are also very concerned about the price of cotton. The development of the cotton futures market provides cotton spot companies with the functions of price discovery and futures hedging. Therefore, studying the cotton futures market price has become a matter of great concern to both the cotton industry and the futures industry.

Since the end of last year, the state has introduced purchase and storage policies from multiple perspectives such as taking care of the interests of farmers and stabilizing the cotton industry. The price of purchase and storage is high, and the quantity is considerable, and the decline in cotton prices has stopped. Regarding the purchase and storage price of 12,600 yuan per ton, many people in the industry speculate whether the future price positioning of the cotton market will be based on this axis? fell. Obviously, the possibility is not very high. With the strong promotion of the national purchase and storage policy, the government has invested huge sums of money to purchase and store cotton, and has stipulated the minimum protective price for the purchase and settlement of farmers by purchasing and storage enterprises. This is purely an act of macro-control to save the market. The original intention of the policy has gradually emerged since the introduction of the policy. Last winter and this spring, cotton farmers received benefits. The introduction of the policy to revitalize the textile industry plan has restored the confidence of the industry. Looking at the current situation of the industry, a stable market, stable prices, and stabilizing enterprises and people's livelihood are the biggest political issues at present. It is unlikely that major materials will rise or fall again. Many of the country's measures to stimulate the economy are being implemented step by step. rise. The driving force for the increase comes from the recovery of upstream products. The national reduction of export tax rebates for textile products is a big plus. The double reduction of foreign cotton such as U.S. cotton and domestic cotton planting area also brings long-term benefits to the upward trend of cotton prices. But this seems a bit optimistic. The negative effects caused by the financial crisis will not last for a day or two. A large number of small textile companies have been crushed by market shocks and will not recover in the short term. Although the current cotton sales price is on the rise, the price of lint cotton represented by grade 229 from the public inspection to the factory has never been higher than the price of cotton purchased and stored by the state. The current embarrassing situation that the entire industry is in may cause this year's cotton market to fluctuate and adjust based on the national purchase and storage price.

Most of my country's textile products are exported, and everyone knows that the economic crisis that is still going on is having the greatest impact on China's textile exports. At the same time, foreign textile markets are also facing fatigue and downturn. If the downstream is not smooth, how can the price of domestic cotton used for textiles continue to rise? This is a very simple truth.

1. Characteristics of the cotton spot market:

(1) Cotton spot prices fluctuate greatly. Since the liberalization of the cotton market on September 1, 1999, cotton prices have fluctuated violently, which can be clearly seen from the trend chart of cotton spot prices.

The picture shows the trend chart of China's cotton price index

(2) There are many factors that affect the spot price of cotton. This is basically the same as the futures market factors, which will be discussed in detail below.

(3) Large output and large consumption. China is the country with the largest cotton production and consumption in the world, accounting for more than 25% of the world's production and consumption.

(4) Domestic inventory changes greatly. Generally speaking, when the inventory-to-consumption ratio at the end of the period is around 30, the market can show a basic balance between supply and demand. Below this level, the market becomes resource-constrained.

(5) my country’s cotton import volume is large and has a great international influence. my country imports a large amount of cotton and exports a lot of cotton textiles. Therefore, China's cotton prices are highly linked to world cotton prices.

(6) Annual supply and demand changes greatly. Mainly reflected in the large changes in domestic cotton planting area; large changes in output; large changes in consumption; large changes in inventory; and large changes in prices.

2. Characteristics of cotton industry:

(1) my country’s cotton industry ranks first in several aspects.

It ranks first in output, accounting for more than 1/4 of the world's output; it ranks first in consumption, accounting for nearly 1/2 of the world's consumption; it ranks first in import volume, accounting for about 1/7 of the world's output.

(2) Cotton production areas are relatively concentrated. The main producing provinces are Xinjiang, Shandong, Henan, Hebei, Hubei, Jiangsu, and Anhui, and their output accounts for about 80% of the country's total output.

(3) The cotton planting area fluctuates greatly. China's cotton sown area changes greatly, mainly affected by price. If prices are high this year, farmers will plant more crops next year; otherwise, they will plant less crops, and the adjustment range for this area will be relatively large. This situation increases the range of price fluctuations between years and increases production and operating risks.

(4) Cotton consumption is relatively concentrated. The main sales provinces are Shandong, Jiangsu, Henan, Zhejiang, Hubei, etc., accounting for approximately 66% of the total national consumption.

(5) Cotton consumption is growing rapidly. Since 1997/98, the domestic textile industry has developed rapidly, with an average growth rate of about 14. China's cotton consumption accounts for a significant increase in its share of the world's total.

(6) The pace of cotton marketization is fast. The cotton market was fully liberalized in 1999; it joined the WTO in 2001; cotton futures trading was launched in 2004; and textile quotas were canceled in 2005. Although it was only liberalized for eight years, the pace of marketization is relatively fast.

(7) Cotton price fluctuations have a large impact. The cotton industry chain is long, involving agriculture, textile industry and commerce. Cotton has many production, circulation and processing links from raw cotton planting to picking to ginning to storage and spinning, involving tens of millions of agricultural families, an agricultural population of about 150 million, 300,000 ginning workers, and 18 million textile workers. Worker.

(8) The variety attributes of cotton determine many factors that affect the price of cotton, and the price of cotton fluctuates greatly. From the perspective of the production process, changes in cotton prices cause the comparative benefits of growing cotton to fluctuate greatly between years, which affects farmers' planting in the next year, causing the cotton planting area to fluctuate greatly from year to year, which in turn intensifies the fluctuations in cotton prices. In the past 90 years, the cotton planting area in my country has been as high as 102.6 million acres and as low as 55.95 million acres, a difference of nearly double. Moreover, weather, especially rain and waterlogging during the harvest season, has a greater impact on cotton yield and quality.

The above brief introduction to the characteristics of the cotton spot market and industry will help us further understand cotton prices, analyze the cotton spot market and conduct research on the cotton industry.

Analysis of external factors affecting cotton

If we believe that supply and demand are the internal reasons for cotton price changes, then we can divide the various factors that affect cotton into categories. One is supply and demand. Relationships are the internal influencing factors, and the second is the external influencing factors of cotton, that is, other influencing factors besides supply and demand, such as policies, substitutes, international markets, etc.

1. Policy aspect: Generally speaking, the impact of policies on prices is relatively short-term, but sometimes it is very drastic. The main policy factors that affect cotton spot prices are:

(1) Government macro policies: including political and economic policies, such as agricultural policy, foreign trade policy, financial policy, securities policy, etc., will all have an impact on cotton futures prices Make an impact. While analyzing the impact of major national macroeconomic policies on cotton futures prices, we must also analyze the impact of policies issued by the State Council and other functional departments on cotton prices.

(2) Industry organization policies: The role of industry organizations in the market economy has become increasingly obvious. The industrial policies they formulate sometimes affect the production scale, output, sales volume and relative price of cotton.

(3) National Reserve Plan: The auction, purchase volume and purchase price of state reserve cotton determine the degree of impact on cotton prices.

(4) Agricultural subsidy policies and textile import and export policies of various countries. Textile export policies and cotton quota policies affect domestic cotton prices, and international cotton prices are closely related to cotton subsidies.