Domestic cotton prices face further downward pressure, with production down 14.2%

According to a survey by the China Cotton Association, this year's cotton production is expected to be around 6 million tons, a decrease of 1 million tons, or 14.2%. Facing changes in cotton production and the market situation, as the new cotton harvest approaches, the Agricultural Development Bank of China continues to play its role as the main channel for supplying cotton procurement funds, and has now prepared 60 billion yuan so that "money is waiting for cotton."

With the approval of the State Council, the National Development and Reform Commission, the Ministry of Finance and the Ministry of Agriculture jointly issued a document on April 10 this year, launching the pilot reform of the target price for cotton in Xinjiang in 2014, canceling the temporary purchase and storage policy, and setting the target price for the 2014 cotton year at 19,800 yuan/ton.

The cotton target price reform policy will have a major impact on the cotton market in the 2014 year. Judging from the current situation, the cotton market in the 2014 year shows four characteristics: continued decline in production, some recovery in demand, market supply exceeding demand, and relatively strong downward pressure on prices. In Xinjiang, affected by expectations for the implementation of the target price pilot policy, production is expected to be flat with last year's 4.5 million tons. After the implementation of the target price subsidy policy, the new year's cotton price will be formed by the market, domestic and international cotton prices will be re-linked and move in tandem, domestic cotton prices will face further downward pressure, the situation of persistently high raw material costs for textile enterprises will gradually improve, and the textile industry, which has been in the doldrums for years, is expected to gradually recover. It is expected that by the end of August this year, there will still be more than 11 million tons of reserve stocks in China, equivalent to more than one year of domestic consumption. From the perspective of the international market, production has exceeded demand for five consecutive years.

In accordance with the policy orientation of the target price reform, the Agricultural Development Bank of China will continue to play its role as the main channel for supplying cotton procurement funds and actively support cotton procurement on market principles. It will support purchasing and marketing enterprises in buying cotton at market prices. When the government does not intervene, it will strictly support procurement on market principles; when the government steps in to provide a floor, it will follow the government closely and actively implement the government's policy intentions. Differentiated credit policies will be implemented in Xinjiang and the mainland, with Xinjiang taken as the main region for supplying cotton procurement funds, improving approval and payment efficiency, and ensuring that cotton farmers receive their returns in a timely manner. In mainland cotton areas, enterprises will be supported in carrying out procurement at market prices on market principles, using credit leverage to promote the realization of the state's policy intentions. The Agricultural Development Bank of China will cooperate with local governments in carrying out procurement work. For enterprises whose loan qualifications have been recognized and which are actually provided with credit support, sufficient loan supply will be guaranteed to prevent the occurrence of "IOUs" due to funds not being in place.