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    Analysis: China's cotton policy and future price trends

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    [Abstract]:
    Firstofall,inthecurrentmarketenvironment,weanalyzewhetherChina'scottonpurchasingandstoragepolicyisreasonable.Thecottonpurchasingandstoragepolicyformulatedbythestateistoincreasetheincomeofcottonfarmers

    First of all, in the current market environment, we analyze whether China's cotton purchasing and storage policy is reasonable. The cotton purchasing and storage policy formulated by the state is to increase the income of cotton farmers and stabilize the price of cotton. This policy seems reasonable and reasonable. In fact, it only plays a role in raising the price of cotton. It does not play a stable role. , disrupted the market order. We took the cotton monopoly high price and sold it to the enterprise at a high price. The company bought high-priced cotton, and finally the product could not be sold. This policy was even protected by foreign cotton farmers, and even their cotton enterprises were protected.

    Now, the national reserve cotton is losing money, and it is the money of the state finances, and it is also the taxpayer’s money. This money is mainly taxed by industrial enterprises and commercial enterprises. Farmers basically have no taxes. It is intuitively said that textile enterprises have paid taxes to supply cotton farmers, and textile enterprises have bought cotton for cotton farmers at a high price. This is extremely unfair. The result is that cotton farmers are profitable, but textile companies are losing money. We buy 98% of China's cotton at 20,400 yuan / ton. If you want to buy a textile company, you have to buy it at a high price. You are losing 17250 yuan / ton to the company. It is still the highest price in the world. How to sell the products produced by textile enterprises? ? Our textile enterprises can not use cheap imported cotton, how does it survive? China has always been an important textile exporting country, and as a result, it has not been competitive in recent years. We will force or close down our textile enterprises, or support them, or flee from China, and go to foreign factories. Fortunately, this policy has been cancelled, and we will not talk about it.

    However, this year, the target price subsidy method is used to encourage cotton farmers to increase the cotton planting area and output. I think this is a continuation of the wrong policy. The basic principle of economics is that commodity prices are determined by supply and demand. A serious oversupply will inevitably lead to a fall in prices. A brief analysis of China's supply and demand situation can illustrate this point. There is data showing that the annual demand for cotton in China is more than 9 million tons. I think this statistic is open to question. According to my calculation, it should be the amount of cotton sold by the national reserve and the quantity of imported cotton is the demand for domestic cotton, because the national reserve has acquired 98% of cotton every year, and there is no more cotton in the domestic market. More than 1 million tons of dumped storage and more than 2 million tons of imports each year, a total of less than 4 million tons, which should be the annual demand. Another algorithm can also draw similar conclusions: If our demand is really more than 9 million tons per year, then the annual import of more than 2 million tons plus more than 6 million tons of annual output can just meet domestic demand, then China is 600 per year. Where is the tens of thousands of tons of national cotton storage? It can be seen that the domestic demand for cotton over 9 million tons is untrue, and the actual demand should be below 4 million tons.

    Oversupply is already an indisputable fact. In China, there are still 13 million tons of cotton in the national reserve. According to official accounts, it accounts for 60% of the total annual cotton demand. The demand is so small, the inventory is so big, and with the addition of more than 6 million tons of cotton every year, it can be said that the contradiction between supply and demand has reached a very serious degree. Therefore, the policy of using target prices to stimulate production is certainly wrong. It will lead to the lowest price of cotton in the world in the future, and cotton farmers or countries will suffer huge losses.

    Despite this, this year's New Deal has been introduced. As the government's policy should be continuous, it should be implemented. Otherwise, the farmers will be at a loss, and the government will bear the risk of a crisis of confidence. Therefore, the key task now is to find a feasible implementation. Since the introduction of Document No. 1, the country has not yet issued a complete implementation rule, which shows that this is an urgent problem to be solved. Then let me talk about my own opinion.

    First, how to determine the market price of subsidies this year

    Now that the target price of 19,800 yuan / ton has been set, there is still a market price has not been determined, that is, the price difference between the target price and the market price has not been determined. Then, what is the market price? The 2nd Cotton Association Council meeting announced that the average selling price of lint in October-December 2014 will be set as the market price. This method can really reflect the market price at that time, but there are also drawbacks, because the market price of lint can not be measured now, and the sales price between the ginning factories will be different in the future. If all the calculations, the workload will be too Big. Moreover, if the price of the ginning mill is particularly low in the future, the pressure on fiscal expenditure will be too great. Therefore, it is best to determine the market price now, so that the cotton farmers know what they are getting, and how to get guidance on their sales methods and prices.

    I think that you can use the "price discovery" function of the futures to determine the market price, because now the trader is trading at this price, the ginning factory can also sell at the futures market at this price, which is the real lint now. The expected price of the transaction. According to the idea of ​​setting the market price according to the average selling price of the ginning factory lint in October-December, we can select the price of the cotton 1411 contract in the futures market to determine the market price. Now the futures price of cotton 1411 contract is 16,300 yuan / ton, minus the processing fee of 500 yuan / ton of ginning factory is 15,800 yuan / ton, we will determine this price as the market price of cotton, that is, this year for cotton subsidies The market price is 15,800 yuan / ton. This makes full use of the characteristics of the futures market to serve the spot market.

    The market price has been determined, and the specific measures for subsidies will be fixed. The target price is 19,800 yuan / ton, the market price is 15,800 yuan / ton, if you make up the lint, the target price minus the market price, equal to 4,000 yuan per ton; according to seed cotton, 4000 yuan multiplied by 38% of the clothing rate, Equal to 1520 yuan per ton, converted into 0.76 yuan per kilogram; according to the acres, 0.76 yuan multiplied by the average yield of Xinjiang 550 kg, equal to 418 yuan per mu.

    When subsidizing cotton farmers, it should be supplemented by lint or by seed cotton, or by the number of acres, but it has not yet been determined. My tendency is to make up the seed cotton or the number of acres, which can be directly filled in the hands of the farmers, and also operate. However, if you use seed cotton to make up, some people may report it, selling 500 pounds is said to be 800 pounds, and multiple sets of state subsidies. I think the most appropriate method is to make up the amount of acres, and the amount of acres is directly distributed to the cotton growers for 418 yuan per mu.

    In this way, the market price has been set, the amount of subsidies has been fixed, and the fiscal expenditure has been counted. The problem of how to make up is solved.

    With this rule, the ginning factory can carry out the hedging operation in the futures market, and now it can convert the cotton price of 6,000 yuan/ton into the purchase price of cotton wool at a price of 15,800 yuan/ton. The ginning factory processed into lint cotton, sold at the price of 16,300 yuan / ton in the futures market 1411 contract, you can earn a processing fee of 500 yuan per ton of lint, which guarantees future production, farmers can also press 3 yuan The contract price of Jinjin sold the seed cotton, and with the subsidy of 0.76 yuan/kg, the cotton farmers also sold at the price of 19,800 yuan/ton of lint, avoiding the risk of falling cotton prices in the future. This is good for both companies and cotton farmers.

    Second, how to solve the huge inventory left over from the storage

    The temporary storage policy was introduced in 2008. At that time, the United States experienced a subprime mortgage crisis, global commodity prices plummeted, sales plummeted, and China's cotton and rubber prices also fell to more than 8,000 yuan / ton, corn also appeared to sell hard, 1400 yuan / ton no one wants. In this case, the state has introduced a temporary collection and storage policy. At that time, this policy of purchasing and storage did play a role in protecting the interests of farmers. At that time, the state’s collection and storage also had the meaning of bargain-hunting. The corn was 1,500 yuan/ton, and the cotton was 12,600 yuan/ton. Later, they all made money. This not only protects the interests of the peasants, but also increases the fiscal revenue. It is a good policy of killing two birds with one stone. Later, the policy of purchasing and storage changed its taste. It was purchased at the highest price in the world, and the policy is now difficult to get out of the warehouse.

    Now, the 13 million tons of stock cotton that has been formed and stored has become a hot potato. It is really difficult to ride a tiger. When a cotton farmers find it difficult to sell cotton, the government can buy it at a high price; when the country’s cotton storage is difficult to sell, no one can save you. How to eat this mountain, how to retreat from the back of this tiger? This requires us all to discuss.

    At the current selling rate, the new cotton stocks will be sold at a maximum of 200 million tons, with 11 million tons of stock remaining. This year's new cotton production is expected to be 6 million tons, not counting the import, a total of 17 million tons. The demand is less than 4 million tons. How to deal with it? If you don’t seriously solve the 13 million tons of national cotton storage, it will accumulate in Curry and may become “unfinished cotton”.

    If you want to digest 13 million tons of stocks, you can only throw them away. If you want to throw them, the price must be lower than the import price. If the reserve price is still above the import price, you still can't sell it, and the market is still people's. At the same time, it is impossible to allow a large amount of imported cotton to flow in, and the quantity and speed of the sale of the national reserve cotton can be guaranteed. Therefore, we must make full use of the three months of the new cotton unlisted 6, 7, 8 to increase the amount of reserves, increase the number of enterprises to buy. In order to increase the purchasing power of enterprises, in addition to price cuts, it is necessary to cancel the 4:1 imported cotton mix. The current selling price of 17,250 yuan / ton will continue to decrease. The three months will be reduced at least once a month, each time by 1,000 yuan / ton, and the stock of national cotton reserves will be controlled below 8 million tons before the new cotton market.

    In order to avoid the situation of the price of new cotton on the market, and to give cotton farmers a gap in selling cotton, you can consider suspending the dumping at the end of August, and then start dumping in January 2015, and have been selling without any reserve price. Go on. I expect that it will be that China will no longer produce a bit of cotton in the future, and it will take at least three years to digest the existing stock of cotton, and the loss can be reduced to a minimum.

    Another way to digest inventories is to allow companies that can purchase state reserves to enter the futures market for sales. Use the advantage of the futures market to purchase the diversification of the main body and increase sales. The relevant departments can negotiate with Zhengshang Institute to change the warehouse of the national reserve cotton into the delivery warehouse of cotton futures. The dumping and delivery bills obtained by the enterprise can directly become the warehouse receipts of the futures, allowing delivery in the futures market. Enterprises can use futures hedging to resolve the risk of price changes, and at the same time reduce the cost of many intermediate links and accelerate the selling of national reserve cotton.

    Third, thinking about the future cotton policy

    1. Completely deny the current cotton protection policy, including policies such as purchasing and storage policies, price subsidy policies, and purchases of reserve prices. The common feature of these policies is to stimulate the enthusiasm of cotton farmers. It will inevitably lead to an increase in planting area and an increase in production. Even if it does not increase, it will not reduce much, and the excess capacity will continue to expand. Reposing and solving the problem of cotton farmers’ difficulty in selling cotton is to transfer this problem to the country. Now the country does not collect reserves and change it into a target price subsidy policy. It also needs to digest the huge inventory formed by the storage and storage. How can cotton enterprises possibly Like the National Reserve, the whole market buys new cotton that exceeds domestic demand. Then the phenomenon of selling cotton will still appear. At that time, it is very likely that cotton is not in the hands of cotton merchants, or is backlogged in the hands of cotton farmers, or The backlog is in the national reserve.

    Also, if the full price difference subsidy is not provided at the bottom line, the cotton farmers can obtain subsidies at a very low price; even if the market price of the subsidy is set, the new cotton is almost certainly sold below the market price, although the cotton farmers are A full subsidy that can get the price difference between the market price and the target price is also a loss. The finances took so much money to protect the interests of cotton farmers, but the results were discounted and did not achieve the desired results.

    In short, the cotton target price subsidy method will continue to be implemented, not only can not turn around, but it may also worsen. Therefore, we must use the courage of the strong man to break the wrist, completely cancel and no longer issue any form of cotton protection policy.

    2. Thoroughly update the concept. We must have sufficient confidence in the market economy, and we must conceptually eliminate the psychological stereotypes and inertial thinking formed in the past when commodity shortages occur. We must fully understand the complementary role of commodity circulation formed by the international division of labor in globalization.

    At that time, foreign wheat was sold to China at around 0.40 yuan/kg, and our planting cost was close to 1 yuan/kg. Policymakers have decisively implemented the policy of returning farmland to forests, using a large amount of land to grow trees and grass, improving the environment, and supplementing domestic demand through imports. The grain can still be solved by the complementarity of global commodity circulation, so it should be more on the cotton issue. feasible.

    3. Resolutely eliminate backward production capacity. At this stage, China's agricultural production methods are still very backward and inefficient. It can be said that protecting the interests of farmers is to protect backward productive forces and to protect backward production capacity. Like this year, the corn mold in the hands of farmers in the northeast has changed, and the country has fully recovered. The state has given the bottom, then who will manage the food carefully in the future, even the broken countries have to pay the country, this is a way to protect the lazy, encourage mistakes!

    4. Encourage farmers to enter the city. The policy of encouraging cotton cultivation and the goal of urbanization are also contrary. It is not contradictory to encourage farmers to enter the city and encourage planting. The labor force has become a scarce resource in the world. Cancel the encouragement policy and liberate a large number of farmers from inefficient labor and integrate into the global labor market. China's population turning point is coming, and the problem of aging has become increasingly apparent. In the future, there will be a labor shortage in all walks of life. It is not likely to be able to fill this gap by transferring a large number of rural laborers. Effective labor has always been China's advantage, but now it has become a disadvantage. The labor shortage is caused by leaving the peasants on the land. Xinjiang alone has to use one hundred and twenty thousand migrant workers who pick cotton every year. In contrast, many companies in the Pearl River Delta have moved to Southeast Asia to set up factories because of rising labor costs. These prove that the deployment of labor resources is not reasonable enough. To liberate the productive forces and let textile enterprises of this type reduce the cost of employing people and increase the competitiveness of exports, China's industrial production can form a virtuous circle. Therefore, it is necessary to liberate the productive forces on a large scale and release the rural labor force in large quantities, and the Chinese economy will have a future.

    5. Take “shock therapy” to control the cotton planting area. The government can try to levy a cotton planting tax, which is to levy taxes on other crops, and to levy taxes on cotton, so that the cotton planting area can be quickly reduced.

    6. Vigorously promote the unfavorable factors of cotton planting. From 2015 onwards, even from now on, the cotton farmers are strongly promoted the risks of cotton planting: First, the global cotton surplus, China's storage is huge; second, our production costs are too high, not competitive. Mechanized operations in the United States make the cost of growing cotton and growing soybeans basically the same, and the difference in price is only due to the difference in yield. If soybeans and seed cotton are the same, then the price should be the same. Soybean now sells 4,000 yuan/ton, seed cotton should also sell 4,000 yuan/ton, and synthetic cotton is about 10,000 yuan/ton. Now the cotton imported from the US is 15,000 yuan / ton, the reason why there is such a large price difference, is because China's storage and sales push up the price, let people sell a good price. The current target price stimulus policy, although loosening the price of cotton, companies can buy at low prices according to market conditions, participate in market competition, but our high cost planting low-price sales, but also to greatly harm the interests of cotton farmers.