Cotton Prices Rise And Fall &Nbsp; How To Find Safe Haven

cotton

Reduce dependence on cotton

"In the short term, reducing inventory is a way for most enterprises to avoid risks."

Wang Shougen, general manager of China's cotton net, suggested that under the present circumstances, cotton enterprises should try their best to keep their inventories as low as possible.

At present, some garment factories in Hebei begin to use chemical fiber and blended products to reduce their dependence on cotton raw materials.

Sun Weilun, President of the provincial Cotton Spinning Association, said: "the proportion of blended products used for cotton spinning products in some factories has increased over last year.

For example, the ratio of pure cotton and chemical fiber to a product last year is 8: 2. This year it may reach 6: 4. A ton of products can reduce many costs. "

Technological pformation strengthens risk tolerance

Sun Weilun recently visited a dozen cotton spinning enterprises in our province and found that not only large state-owned enterprises, but also some private enterprises were aware of the necessity of upgrading products, and intensified technological pformation efforts.

"Some private owners have 100 million yuan on Ma Xin equipment, which was unthinkable before."

Sun Weilun said that after the pformation of industrial technology, the upgrading of product grades and the increase of added value, enterprises' ability to resist risks also increased.

However, some small and medium sized cotton spinning enterprises which are relatively backward in technology and capital are facing the danger of being eliminated.

Industry insiders believe that in a certain period, industry differentiation will be further intensified. Enterprises with integrated industrial chain and efficient supply chain integration will have the opportunity to further expand market share.

Because of the large profit margins and the strong bargaining power for the downstream, the cotton prices will not be affected by the sharp rise and fall of cotton prices.

The establishment of cotton price stabilization mechanism is imminent.

"The stability of cotton production is the source of all the industrial chain stability.

Yang Shanxing, executive vice president of the provincial Cotton Association, said: "government departments should increase cotton farmers' Cotton Subsidy and improve the temporary storage system to keep cotton prices basically stable."

Experts believe that cotton farmers have been on the low side for 3 consecutive years. If cotton prices continue to fall, cotton planting area will continue to decline.

The state should take part of the funds to establish a high quality cotton base in the main cotton producing area.

A responsible person of the provincial Cotton Textile Association said that the price fluctuation of the market economy is inevitable after the purchase and sale of the cotton market has been liberalized. How to avoid the risk brought by the price ups and downs to cotton farmers is worth studying.

"The overseas practice is to avoid risks by the cotton association. For example, the Australian cotton association has been operating for more than 100 years and has its own capital of 10 billion dollars.

The association, with its strong economic strength, has been able to resolve market risks for cotton farmers by signing agreements on purchase and sale and purchasing at the bottom price.

The official said: "only by vigorously developing various types of organizations such as production, supply and marketing unions, cotton associations, and so on, can we improve the competitiveness and risk tolerance of the market by guiding and improving the degree of organization of production by means of industrial organizations."