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Extreme Weather Hits &Nbsp; Cotton Is Facing A Reduction In Production.

2011/3/9 17:24:00 105

Cotton Global Economy Polyester Staple Fiber

Since 2010, international cotton prices have continued to rise.

Entering the 2011, the long-term accumulation of supply and demand and the global reduction in production caused by extreme weather created a favorable external environment for the rise of cotton prices.

Therefore, we believe that this year's international cotton prices will continue to rise, and related companies are expected to continue to benefit.

From the perspective of demand, domestic demand continues to boom and supply uncertainty increases.

along with

global economy

The revival of the domestic textile and garment industry in 2010 was all the warmer.

The relatively rigid downstream yarn and cloth production demand, the upgrading of brand clothing consumption caused by the increase of urban residents' income level, and the broad prospect of the rural clothing market will ensure the continuous and vigorous demand for cotton.

In terms of supply, the prediction of the expansion rate of cotton planting area in 2011 ranged from 6% to 8%.

But in the future, the poor and changeable climate conditions may lead to the decline of China's cotton yield.

For example, the strong "La Nina" phenomenon in the first half of 2011 and the possible extreme weather during the boll opening period will have a significant impact on cotton production.

At the same time, with the reduction of supply and control capacity caused by the reduction of national cotton stocks, and the repeated restrictions on India's cotton export restrictions, cotton supply is facing greater uncertainty.

In addition, from the cost point of view, the degree of mechanization of cotton planting in China is obviously lower than that of wheat and rice, and the cost of labor is higher. In addition, the rising costs of seed and plastic film will increase the cost of cotton planting.

The US Department of agriculture (USDA) has recently predicted that China will need to import about 3 million 300 thousand tons of cotton in 2010/2011.

Cotton print export

Restrictive policies, and the current high US cotton contract rate, the future cotton import cost is still high.

From the perspective of the purchase cost of seed cotton, we believe that the cotton price in 2011 will be 25700 yuan / ton as the bottom limit, and the annual high level will be wide and wide.

It is worth noting that the increase in cotton prices in the second half of 2010 has led to higher prices of major staple products such as PET staple.

However, we believe that

Psf

Substitution does not have a decisive impact on cotton demand.

First, in the long run, the highest correlation with cotton trend is filament, not staple fiber, and the large-scale capacity expansion of filaments requires higher cost and technology input, and the production increase in the short term is limited.

Second, with the improvement of the income level of our residents, the demand for the quality of clothing and home textiles has been increasing. Under the demand driven by the upgrading nature, the requirements for some high-quality raw materials are gradually rigid. Generally speaking, the quality and comfort of polyester staple fiber are lower than that of cotton, and the substitution effect will be suppressed.