Market Observation: Behind "The Highest Cotton Price In Ten Years"

 

The first factor is "continuous de Stocking". Domestic cotton has been continuously de stocked since 2015, and the national storage inventory has decreased from more than 11 million tons in 2015 to less than 500000 tons after the end of rotation in 2021.

 

Of course, in the last two years, the State Reserve may also import some cotton as reserves, and the specific quantity is still not certain. However, even assuming that there are 2 million tons of cotton, it is difficult to change the fact that the National Reserve has a low inventory. This is the basis for the sharp rise in cotton prices this year.

The second is "money release". Since the outbreak of the global epidemic in 2020, the U.S. currency has released a large amount of water, causing the global commodity prices to soar. And cotton is also rising, prices continue to rise. In addition, the U.S. release of water also led to an increase in the purchasing ability of residents. The demand for cotton in 2022 is indeed good.

The last factor is the expansion of production capacity and the improvement of industrial concentration: in the past few years, domestic ginning plants have made good profits, and many ginning plants have begun to expand their production capacity. In recent two years, the production capacity of Xinjiang cotton ginning plants has increased greatly, resulting in a shortage of seed cotton in Xinjiang, and the situation of rush harvest is more and more serious year by year.

In addition, with the layout of central state-owned enterprises and state-owned enterprises in Xinjiang in recent years, from the planting end to the ginning plant and then to the trade end, these enterprises rely on the capital advantage to expand their land in Xinjiang, the industry capacity concentration is further improved, and their discourse power in the cotton industry is also becoming stronger and stronger.