Textile, Clothing And Luxury Industries: Cotton Direct Subsidy Policy, Short Term Cotton Textile Listed Companies

From September to November, the seed cotton price during the implementation of cotton target price subsidy.

At present, China Cotton Association and relevant departments have done a good job in price monitoring.

The price collection interval, as determined, shows that the cotton subsidy policy rules are nearly completed.

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The end of the purchase and storage policy, the state adopted direct subsidy policy to cotton growers: on 5 April, approved by the State Council, the national development and Reform Commission, the Ministry of Finance and the Ministry of agriculture jointly announced the target price of cotton in 2014 was 19800 yuan / ton, and the policy of open storage and storage of cotton was first officially concluded in Xinjiang, but the specific plan has not yet been promulgated.

After the direct subsidy policy is implemented, cotton farmers will sell cotton at market prices. When the market price is lower than the target price, the state will grant subsidies according to the two party price and planting area, production or sales volume; when the market price is higher than the target price, the state does not grant subsidies.

Raw cotton storage

The national cotton inventory is large, the cost is high, and the domestic consumption is decreasing. In 2011, the national cotton reserve policy was implemented. The amount of cotton purchased by the State Reserve in that year was 3 million 130 thousand tons, accounting for 47% of the total cotton output in the country, and 90% of the total purchases in 2012.

The state reserve cotton reduces the fluctuation of cotton price and safeguards the interests of cotton farmers. But for the country, it needs to pay a large amount of capital cost and warehousing cost each year.

Before the implementation of the State Reserve policy, cotton consumption in the past 2006-2010 years was generally between 800~1000 million tons.

Since the implementation of the state reserve system, domestic cotton consumption has decreased significantly, up to 6 million 630 thousand tons in 2013, one is that enterprises import cotton at low prices, and two is that enterprises directly import from abroad without quotas.

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At the same time, the end of the national cotton inventory also increased significantly, before 2010, the end of the stock is below 5 million tons, until the end of 2013, the end of the stock reached 10 million 455 thousand tons.

The new policy adopted direct subsidy, long-term good industry, short term cotton price pressure, but the scope is limited: after the national abolition of the national cotton temporary reserve policy, by the end of 2013, the end of the cotton inventory reached 10 million 455 thousand tons.

From April 1, 2014 onwards, in order to speed up the dumping, the price of lint throwing and storage from 18000 yuan / ton to 16936 yuan / ton at the weekend was reduced by 1064 yuan per ton.

In the long run, the direct subsidy policy is good for cotton spinning enterprises.

Direct subsidy policy can stabilize the cotton growers in the upper reaches of the industrial chain to ensure the supply of raw materials.

The direct subsidy policy will help to ease the difference between inside and outside cotton prices through the state subsidy, reduce the raw material prices of cotton enterprises and enhance the international competitiveness of cotton enterprises, and will benefit the related textile enterprises in the long term, such as Lu Tai A, Huafu color spinning, and Baron East.

In the short term, the leading companies in listed companies have low price quotas for importing cotton, and maintain a higher gross margin.

After the direct subsidy, the price of the whole raw material is down, and the price of the terminal is rising. Therefore, the price increases and the price drops.