Notice Of Two Ministries And Commissions On Issuing Implementation Measures For Improving Cotton Target Price Policy

On April 14, the National Development and Reform Commission and the Ministry of Finance issued the "Notice on Improving the Implementation Measures of the Cotton Target Price Policy". With the consent of the State Council, we will continue to implement the cotton target price policy and improve the implementation measures in Xinjiang.

At present, all parts of the country are in the busy period of spring ploughing and spring sowing, and most cotton farmers are very concerned about the information related to cotton subsidy policies. The timely release and improvement of Xinjiang cotton target price policy is a "reassurance" for cotton farmers, which is more conducive to changing the wait-and-see mentality of some cotton farmers, and will largely reverse the decline of cotton planting area in the new season.

Cotton is an important strategic material. The clothing and food of our 1.4 billion people should be in the hands of our Chinese people. We should not be "choked" by foreign suppliers at the "critical moment". We should continue to encourage farmers to plant cotton by means of "subsidies" to maintain the basic cotton planting area in the main cotton producing areas, which will help stabilize and protect China's "cotton security".

"From the price of 18600 yuan/ton, it is the same as the price in the previous three years, which has a positive effect on stabilizing the continuity of cotton prices, and also gives cotton farmers a positive signal to ensure the stability of cotton income." Lao Yan, a major cotton grower in Korla, told reporters that it can be predicted that because the country has stepped forward to stabilize the output and price, The cotton market supply in the next three years is expected to be sufficient, and the price fluctuation is expected to be stable, which will play a positive role in the balanced development of cotton upstream and downstream industries.

In the current market situation, what are the key factors that determine the rise and fall of cotton prices after the new policy is announced?

"At present, the contract price of Zheng Mian's main force 2309 is about 14900 yuan/ton, which is about 3000 yuan/ton different from the target price of Xinjiang cotton of 18600 yuan/ton. Will the spot cotton price in the future move closer to the 'policy price'?" After the announcement of the national policy to improve the target price of Xinjiang cotton, many investors who are not very familiar with the operating mechanism of China's cotton market put forward their own views. In fact, the national policy to improve the target price of cotton in Xinjiang is mainly related to cotton farmers, while the direct impact on cotton prices is relatively small. The target price is mainly to protect the income of cotton farmers, which has little to do with the rise and fall of cotton market price, but will affect market psychology. Some market professionals believe that when cotton prices are still in a relatively low price zone, a large number of short chases must be inappropriate.

In the long run, there is a supply gap in China's cotton market. When the downstream demand and the export situation of cotton products improve in the future, the domestic cotton price will be closely linked to the trend of the international market. At present, the market operation situation of major cotton producing countries in the United States and other international markets is still highly related to the domestic situation.

According to the data of China Cotton Information Network, as of April 13, 2023, a total of 1074 cotton processing enterprises in the 2022 cotton year had processed cotton and conducted notarial inspection in accordance with the requirements of the reform plan of cotton quality inspection system. The inspection quantity was 27642887 bales, and the inspection weight was 6.2336 million tons. Among them, 973 processing enterprises in Xinjiang inspected 27170290 packages with an inspection weight of 6.1279 million tons; The number of packages inspected by 101 processing enterprises in the mainland was 472597, and the inspection weight was 105700 tons. From these data, although China's cotton planting area will decline in 2022, due to the increase of unit yield, China's total cotton output will increase in the opposite direction in that year. At the same time, Xinjiang's cotton output will account for an increasing proportion of the market, Then the prospect of China's cotton yield per unit area and total yield in the new season is optimistic.

Wang Lei, a cotton merchant in Xinhe County, Xinjiang, said that his company had completed the planting of 12000 mu of cotton, the same area as last year. According to him, some areas in Xinjiang have reduced the cotton planting area this year, mainly in the secondary cotton planting areas. Normally, Xinjiang's annual cotton output is 5.3 million to 5.5 million tons, and last year it reached 6.15 million tons. At present, cotton has been sown in large areas in southern Xinjiang