China Is Adjusting Its Cotton Reserve Policy

The Chinese government is trying to maintain its national reserve system. cotton In order to ensure stable supply of raw materials in textile mills, the result is rather self defeating. Higher cotton prices mean that cotton flows to the national reserve system (which is estimated to be half of the world's cotton stocks), but it does not meet the needs of textile mills.

China's Central Document No. 1 usually lists the priorities of the agricultural sector. This year's No.1 document proposes a target price subsidy pilot for cotton planting and Northeast soybean planting in Xinjiang. Cotton is the main product of the paramilitary Xinjiang production and Construction Corps (XinjiangProduction andConstructionCorps). Northeast China is the planting base of most edible soybean in China.

This Policy document It mentioned the continued reserves of wheat, rice, corn, rapeseed and sugar, but did not mention anything about cotton reserves. This shows that China is quietly abandoning its cotton reserve plan. China's reserve cotton management company (HTPC) said earlier that it would not buy Cotton after the acquisition of 5 million 500 thousand tons of cotton in the beginning of the harvest season in 2013.

An unnamed analyst said: "without this support policy, the planting area of cotton in Henan and Shandong may be reduced. But even if that happens, the Chinese government will not worry too much. China's cotton stocks are so high that there is no need to encourage cotton cultivation.

Yesterday, China's National Bureau of Statistics (NationalBureauofStatistics) said that China's total cotton output last year was about 6 million 300 thousand tons, down 7.7%. among Xinjiang The output of cotton remained unchanged at 3 million 500 thousand tons.

In order to stabilize cotton supply and appease the restless cotton farmers in Xinjiang, China set a lower price limit for cotton in 2011 and began hoarding cotton. However, this policy had a reaction, so that the textile mill could not get the raw materials, and the desperate textile mills had to choose imported cotton yarn.

China's soybean reserves have much less impact on the market. The project was established a few years ago by lobbyists in the Northeast soybean growers. Northeast China is the location of most large mechanized farms in China.

Most of China's soybeans used for oil extraction and forage depend on imports, but China requires tofu to be made from non genetically modified soybeans grown domestically.

A representative of the Heilongjiang Soybean Association (HeilongjiangSoybeanIndustryAssociation) said the association hoped that China would continue to implement some sound soybean reserve policy.