The 2011/2012 cotton growing year is doomed to be full of variables. The degree of economic recovery in the developed countries is uneven, and the cotton export policy in India has been repeated. These factors all affect the cotton market's supply and demand conditions, which also gives the industry an opportunity for the upcoming new cotton. There is more speculation about the supply and demand trends in the planting year. Not long ago, representatives from the U.S. National Cotton Council (NCC) and the U.S. International Cotton Association (CCI) arrived in Beijing and the head of the delegation was accepted by the National Cotton Association of Cotton Farmers Clyde Sharp (Clyde Sharp). The reporter’s interview explained his views on hot issues such as the US cotton planting area in the new year and the trend of future cotton prices. For China, one of the important export markets for cotton in the United States, he expressed his desire and enthusiasm to deepen cooperation.
In-depth communication is a prerequisite for cooperation and mutual benefit. Reporter: What is the significance of the visit of the United States National Cotton Federation to the United States International Cotton Association? Please briefly introduce the delegation's lineup?
Xia Kunlai: Just like in previous years, the purpose of our trip was to hope to better understand the situation of the Chinese cotton market while maintaining the exchange between NCC and the China Cotton Association (CCA). This year, our exchange visits covered all aspects of the cotton textile industry chain. In addition to outside Beijing, we will also visit Zhengzhou and Shanghai in Henan Province to visit partners in China's cotton spinning industry, including spinning mills, storage facilities and ports. We hope to provide Chinese companies with rich production experience and information sharing. I think this will benefit the future exchanges and cooperation between the two parties.
The National Cotton Association of the United States represents the seven links of the cotton industry chain. This delegation has representatives from four links in the cotton industry chain, such as representatives of cotton producers, representatives of cotton storage stocks, cotton traders, and middlemen. representative. Both China and the United States are big countries in agriculture and have many agricultural production resources. The U.S. delegation’s visit to China, just as the Chinese cotton industry delegation visited the United States, all hoped to deepen the understanding of each other’s culture and conduct in-depth discussions on some issues. Only under the premise of comprehensive understanding of each other can we develop more in-depth cooperation, which is very important for the industries of both countries.
Downward impact of cotton prices affect cotton farmers' enthusiasm Reporter: At present, the international cotton price is in a downward trend. Does this affect the cotton planting enthusiasm? According to the current planting situation, what do you think will reach the US cotton planting area in the new year?
Xia Kunlai: As you said, the decline in cotton prices did affect the cotton planting enthusiasm. Due to the shift in crop prices, farmers would choose to grow other crops and give up cotton. In the eastern United States, this phenomenon is most prominent and most farmers will choose to grow soybeans and corn because of their price advantage. In the western United States of America, due to reduced precipitation affecting irrigation, production is expected to decline by 20%, and planting conditions in Texas and other parts of the United States may be in line with previous USDA projections.
Therefore, although the warm climate this spring provided good conditions for the cultivation of cotton, we believe that the 2012/2013 planting area will be slightly lower than the 13.15 million acres announced by the US Department of Agriculture in March this year. The U.S. National Cotton Federation estimates between 12.5 million acres and 12.8 million acres.
Nowadays, the cotton farmers all over the world are in a more difficult position. We conduct research and employ experts in finance to hope to achieve hedging of cotton prices, stabilize the price of cotton, and better protect the interests of cotton farmers. In the United States, many farmers' associations and market-oriented consulting organizations or cotton traders cooperate to formulate market plans to ensure maximum profits. Private cotton traders and specialized cooperatives play an important role in the entire risk management concept.
Reporter: What are your expectations for the 2012 US cotton production and how will the weather conditions affect cotton production?
Xia Kunlai: Weather conditions have a great impact on cotton production. We expect this year's US cotton production to be lower than last year. As a result of the extremely severe drought in Texas and Oklahoma in 2011, the cotton harvest has been significantly reduced. The issue of drought continued to affect the cotton harvest in these areas this year, while other regions have experienced adequate rainfall this year, which is much better than the same period of last year. Based on the above situation, we estimate that the US cotton production in 2012 will be approximately 17 million bales.
Reporter: According to the latest report of the International Cotton Advisory Committee, a large number of cotton backlog stocks will bring heavy pressure on cotton prices in 2012/2013. What do you think about this issue?
Xia Kunlai: At present, all countries have formulated response measures for next year's price movements. This is true in China, the United States, India, and Australia. If these countries further increase their reserves, they will support the increase in cotton prices. Conversely, if the cotton reserves decrease and the sale of cotton releases stocks, it will stabilize the cotton price. All in all, it depends on the supply and demand of the cotton market.
Persistent attention to the Chinese market Reporter: Due to the recent repetition of India’s cotton export policy, the global cotton supply market has undergone some changes. According to the report of the China Cotton Association, at present, China's imports of cotton from India account for 42.8% of the total imports, while the proportion of imported cotton from the United States is 21.2%. How do you view the impact of Indian export policies on the trade of cotton between China and the United States?
Xia Kunlai: At present, China is increasing its imports of cotton. As we all know, changes in the cotton import market are affected by many factors, such as the export policy of Indian cotton. We understand the competitive nature of the global cotton trade. Cotton exporting countries such as India, the United States, and Australia have been striving to increase their share of exports to China and around the world. Therefore, changes in a country's cotton export policy can directly affect exports from other countries. In the past two years, India has constantly changed its export policy from a ban on exports to a very active cotton exporter. We are concerned that the sudden and unpredictable changes in India's export policies will cause greater uncertainty and volatility in the world cotton market.
Despite this, we are still optimistic about the export of US cotton. By the end of July this year, the 2011/2012 cotton growing season is about to end. The United States exported 11.4 million bales of cotton to China, which is expected to reach half of China’s total cotton imports. In 2012/2013, cotton exported by the United States is expected to reach 11.5 million to 12 million bales. Although we have no specific estimates, the United States’ cotton exports to China are expected to continue to account for 40% of its total imports.
Reporter: After experiencing the gloom of the European and American economies, the industry has generally focused on Asian countries with relatively stable economic growth. What is your opinion on this? What is your focus on the Chinese market?
Xia Kunlai: At present, the global textile and apparel industry is very concerned about changes in the economic environment. In the U.S. market, the unemployment rate remains at a relatively high level due to the economic recession, and the recovery of people’s spending power is quite slow. It must be admitted that the U.S. retail market has developed fairly well and the future level of growth will tend to be flat. I think that the growth value of the global consumer market will be reflected in China and India in the future, which will also prompt us to strengthen the US cotton promotion plan in these two countries.
In the cotton field, China and the United States have always maintained a good trading partnership. With the continuous growth of China's economy, the cotton consumer market has also shown great potential. We hope to provide high quality cotton for China's cotton spinning companies. At present, the price difference between cotton and chemical fiber in the Chinese market has limited the use of cotton by enterprises. In other countries, cotton and polyester prices are quite the same, but in China, cotton prices are much higher than polyester prices.
Despite all the challenges, we will continue to work with CCI to promote cotton in China. From production to consumption through the entire industrial chain to show the advantages of cotton fiber, at the same time, also hope that more Chinese companies can participate in, so that more consumers understand the fine characteristics of cotton fiber.
