In 2014, cotton prices fell sharply, cotton production benefits decreased, some cotton farmers suffered losses, and cotton planting intentions declined. In the face of cotton production in 2015, a considerable proportion of cotton farmers are still hesitating. Do they continue to plant cotton or switch to other cash crops? However, the pessimistic news for cotton farmers is that the cotton situation in 2015 is still not ideal.
Limited policy support
On December 28, 2014, at the 2015 Forum on Agriculture, Countryside and Farmers held in Beijing, Du Ying, Counsellor of the State Council and former Deputy Director of the National Development and Reform Commission, said that the scope of the cotton target price direct subsidy pilot program implemented since 2014 will not be expanded in 2015, but still in the original scope. Du Ying said that the reason for doing so was that the government hoped that cotton planting would be concentrated in Xinjiang from the Huanghuai sea area.
According to this analysis, the cotton market in 2015 is expected to have no major changes in policy, that is, cotton farmers may still be in a state of no profit. Industry insiders also predict that the annual cotton farmers' income in 2015/16 may be less, especially in regions where the advantages of cotton planting in the mainland are not obvious.
Imbalance between supply and demand
The country has implemented the temporary cotton storage policy for three consecutive years, which has kept the domestic cotton price high for a long time. The textile enterprises in the downstream are in a dilemma under the multiple attacks of high cotton prices and few orders. After the implementation of the cotton target price policy, the cotton price is determined by the market supply and demand, and the difference between domestic and foreign cotton prices has gradually narrowed, but the cotton demand has not improved.
According to the USDA forecast, the global cotton output in 2014/15 is 25.946 million tons, the cotton consumption is 24.437 million tons, the ending inventory is 23.653 million tons, and the inventory consumption ratio is 96.8%. The supply and demand are basically stable. According to the data of the national cotton market monitoring system, in 2014/15, the total domestic cotton output was 6.51 million tons, the consumption was 8.073 million tons, the ending inventory was 13.207 million tons, and the inventory consumption ratio was 163.43%. The supply and demand were seriously saturated. Therefore, the cotton supply was in a state of surplus at home and abroad.
Wang Tiankai, president of the China Textile Industry Federation, once pointed out that "the economic growth of the textile industry will gradually slow down and shift gears, and the deepening of industrial adjustment and the improvement of industrial competitiveness will continue to develop at a medium speed". It can be seen from this that domestic textile enterprises are in the critical period of survival of the fittest, gradually giving up low-end products and developing high-end products, which means that the demand for cotton raw materials will decrease.
At present, the global oversupply has basically formed a huge pressure on cotton prices. If there is no policy stimulus to the domestic cotton market or the downstream demand has not improved significantly, it is expected that cotton prices will linger at a low level for a long time, and it is difficult to rebound significantly.
