The basic point of view:

On the one hand, is expected to market the country Shouchu cotton this year (10,770, -320.00, -2.89%, it) will not be lower than the total amount of 1,220,000 tons, it is possible to reach 2,220,000 tons; In addition to the WTO agreement and 894,000 tons of tariff quotas within , The state is no longer new import quotas. Shouchu retaining a series of agricultural policy decisions of the domestic cotton price decline will not reach foreign soybean (2898, -152.00, -4.98%, right), such a large decline in cotton. On the other hand, fiscal and taxation policies, financial policies, which are all difficult to solve textile issue of the sale. In order to alleviate the pressure on employment and domestic textile enterprises out of business, cotton, the latter part of the annual cotton price can not be too high. As a result, we believe that the spot price of cotton will only deviate from the year low of about 10% of the cost of cotton, the domestic parts of 10,000 yuan / tons of standard-class cotton price had bottomed out. CF901 futures contract price of 10,080 will become an important stage at the bottom. The latter part of the annual cotton price will be left to save the country’s repressive policies, will not depart from the high of 12,600 yuan / ton too much. From the technical form of large cotton price, cotton price in 2006 and 2007 high of 14650,06 / 2007 low of 12,450’s important to build a large-scale M Tau below, the first drop goal of 2200 points has been completed in the late Fan Chou enter or in the form of a rebound, but an all-time low of 12,000 first-line suppression of the price range will be a high degree of rebound.

First, recalling market

In early November, the global financial crisis caused by weaker demand and market confidence in frustration, domestic cotton price fell sharply. In the second half of the country due to the timely introduction of the increase Shouchu cotton and textile and apparel increased tax rebate rate policy, domestic cotton price appeared to stabilize signs stabilized. International Spot Trading was light, textile companies in the market as a result of a decrease in demand and struggling. And facing tense capital in order to reduce the status quo is difficult to restore market confidence. In mid-October from the relevant departments in a row since the country announced 220,000 tons and 1,000,000 tons of cotton Shouchu the new plan, two Shouchu not only short intervals and intensity, for rarely seen in recent years, but the market is not as immediate as in previous years This is reminiscent of the current financial crisis is raging:

While great efforts to save the market, but the economy is still difficult for the Bureau decadent change in the short term, several of the twentieth century global economic crisis. With the continuous advance of the policy Shouchu, rapid decline in cotton price momentum has been checked. Of course, the international financial crisis, the most difficult time has been needed through observation, but the decline in global economic growth is beyond doubt. Cotton industry chain in the crisis and save the city between the turbulent ups and macro-economic environment.

At this stage, even the most advantage of the cost of production in Bangladesh’s textile enterprises have emerged in cotton yarn inventory backlog.

In addition, as the new cotton supply, China, India and Pakistan, the cotton price has dropped. Over the same period, the U.S. dollar index rose again, the Asia-Pacific region in general stronger currencies. Indonesia is also a major cotton importer, the rupiah exchange rate fell and credit crisis in the country to combat a large textile industry. On the contrary, the U.S. dollar against the euro, pound sterling and Canadian dollar exchange rate fell sharply. At present, the cotton price is the biggest problem has yet to be found to stimulate consumption and price, the impact of China’s demand for textile mill is no confidence in the prospects for the market, but no improvement in the domestic cotton market, increases the export tax rebate rate for textile industry support is limited. In the RMB exchange rate remained stable at the same time, India, Pakistan, Indonesia, and other competitors in the currency exchange rate has dropped, and further increased the plight of Chinese textile mills. As the current cotton price can stimulate demand for the stability of the Chinese domestic market will inevitably reduce imports, the U.S. dollar continued to rise, and ICE Futures difficult to substantially stronger. It is worth noting that in 2001/02 (7 years ago) in recent months, cotton futures contract hit a record low of 28.20 cents recorded, the dollar also rose sharply. We believe that the cotton price trend in the latter part of the market depends on the policies and the outcome of the game, the present domestic and international economic environment to deteriorate in the short term is difficult to reverse, the decline in demand will continue, of course, lead to a substantial drop in prices has been the driving force Released. In the face of economic recession, have introduced policies to rescue the market, the effect of these policies, the economic recession of the efforts to block much in the next period of time can turn for the better macro-economic environment is still an important factor in the price of cotton.

Second, the latter part of market analysis

1, the world’s cotton supply and demand data analysis

The U.S. economy, global consumption of cotton textiles rather pessimistic outlook for the international cotton price continued to fall, including crude oil, other commodities prices down gradually. In the face of cotton price drop, some of the cotton produced in the country’s Government has adopted a different approach to support the cotton growers. One in China in late October Shouchu 220,000 tons of Xinjiang cotton (08/09); India’s cotton seed cotton has been a substantial increase in the minimum purchase price; the United States AWP (adjusted average price in the world) prices in the second week in October or To 52 cents / lb below the growers get subsidies. These policies will help local area to improve the relationship between supply and demand phase, but global supply and demand data are not good. From September to start, ICAC forecasts global consumption of cotton textiles be substantially reduced. According to the latest forecast, 08/09 annual global cotton consumption for 2546 tons, representing a reduction of 3.5 percent the previous year. Among China last year to reduce the 3.7 percent expected this year’s consumption of 1050 tons. In addition to the other countries other than China’s cotton consumption in a total of 14,960,000 tons, representing a reduction of 3% on the year. Global cotton production this year than last year’s reduction of 6% to 24,740,000 tons. China to maintain production at 8,000,000 tons, a slight decrease over the previous year; India and Pakistan’s production rose to 5,460,000 tons and 1,910,000 tons. More than the sum of the three countries account for the output of the world’s total output of 62% over the previous year increased by 4 percentage points. 08/09 due to the annual cotton area has been diverted by other crops, the United States than the previous year to reduce production by 29% to 2,990,000 tons; and Turkey to reduce by 26% to 500,000 tons. By textile consumption by more, the world’s cotton imports this year than last year’s reduction of 6% to 7,830,000 tons. China’s imports were higher than the previous year by 10% to 226 tons; In addition to the other countries other than China imported a total reduction of 4% to 5,570,000 tons. U.S. cotton exports this year over last year to reduce the 7% to 276 tons; India to reduce exports by 9% to 1,360,000 tons; Brazil is expected to export up to 510,000 tons; production by reducing the impact of the Australian cotton exports decreased to 230,000 tons. Chinese 08/09 outside of the annual consumption of inventory than 56% over last year to reduce a percentage point. ICAC forecasts this year, on average Cotlook A Index of 73 cents / lb, last month forecast a reduction of 6 cents. Since the new year’s flower market, cotton price, there is a sharp decline; and cotton production inputs have increased; and cotton compared to other crops in the price more attractive. Therefore ICAC forecast for the year 09/10 global cotton area will not increase next year production is estimated to be 25,360,000 tons.

According to the ICAC projections, 08/09 annual global cotton output and consumption has declined. The production decline was mainly due to increased planting of cotton to food crops and oilseeds. And global economic growth will slow down global cotton consumption for the first time in the past 10 years to shrink, or 5%. And then at the end of the world’s stocks in the 08/09 year will be down 4%. In addition to China, at the end of the world’s stock will continue to increase slightly. However, the developed countries, the decline in the purchasing power of consumers, the evaporation of wealth in the global market, more stringent credit conditions and market uncertainty caused by cotton price will be further pressure. Compared to other crops, cotton price is no advantage, the market generally expects annual 09/10 cotton planting area will be further decline in its production will continue to fall. The global consumption of the basic steady, slightly higher than the level of production, the global cotton stocks are expected to decline slightly in the 09/10 year. Because the ultimate consumer of cotton with a high degree of income-related, and in 2008 and 2009 revenue growth rate of decline, so the final year of the cotton consumption is expected to reduce 1,000,000 tons to 25,400,000 tons. ICAC Secretariat that the cotton in the global textile market share will continue to decrease, in 2009 the ratio was 36.4 percent. 08/09 and the year is also the world’s cotton imports will be reduced by 9% to 7,500,000 tons. As the year 2007/08 cotton production to be less than that at the end of the world’s stock down 4% to 11,900,000 tons. But the inventory ratio is still in high consumption. Earlier this year, leading to the international cotton price is not the reason for the rise of cotton fundamentals, weak dollar and other commodities rose, as well as cotton futures above individuals and speculators is a key factor in admission. At present, prices of cotton and other crops, is not an advantage, of course, the higher cost of cultivation. But from now on the 09/10 year’s planting time for cotton price comparison is quite variable. Perhaps the U.S. dollar will help to improve the cotton price. The main producing countries, the Government has been actively involved in the city of cotton, cotton price support sentiment, the subsidies for cotton, or cotton planting area to prevent the crash. As a result, we expect the world’s cotton planting area and output fell slightly, while the spin rate of consumption is basically stable.