Apparel / Textiles & Accessories

"Xinjiang Cotton" has become a hot word in the news recently. In fact, for many years, Xinjiang Cotton has already won the favor of a large number of well-known retail clothing and home textile brands in the domestic and international markets by virtue of its outstanding strength. In the process of Xinjiang Cotton's continuous and rapid market expansion, it is inseparable from the escort of futures tools.

Recently, Zhengzhou Commodity Exchange (hereinafter referred to as "Zhengshang") held a training course on state-owned enterprise hedging (Xinjiang, Corps) in Xinjiang, and cooperated with the People’s Government of Xinjiang Uygur Autonomous Region, Xinjiang Production and Construction Corps, and related cotton-related enterprises. The representatives held a discussion and discussed topics such as how the futures market can better serve Xinjiang's cotton-related industries under the new development pattern and the high-quality development of the regional economy.

Over the years, ZCE has continued to give full play to the value of cotton futures instruments. It has effectively guaranteed the income of Xinjiang cotton farmers and helped Xinjiang’s cotton industry through various methods such as advancing the “insurance + futures” pilot program, setting up cotton futures delivery warehouses, and supporting warehouse receipt financing. Steady development has also injected a "futures momentum" into Xinjiang's regional economic development.

Xinjiang cotton-related enterprises widely participate in the futures market

Qin Quanjin, deputy secretary-general of the General Office of the Xinjiang Uygur Autonomous Region Government, said that Xinjiang’s natural resource reserves and characteristic industries are inextricably related to the cotton, cotton yarn and other futures that have been listed on the ZCE.

It is understood that since the listing of cotton futures, many cotton-related enterprises in Xinjiang have gradually participated in the futures market and fully realized the value of futures instruments. With the effective use of cotton futures functions, the basis trading model combining futures and spot goods has gradually replaced the traditional "Buy It Now" trading model and has become the mainstream of Xinjiang's cotton trade market.

For example, Xinjiang Lihua (Group) Co., Ltd., Xinjiang Yinlong Agricultural International Cooperation Co., Ltd., Xinjiang Jiafeng Cotton Industry Co., Ltd. and a large number of cotton-related enterprises are currently participating in the cotton futures market.

Among them, Yinlong Agriculture is a foreign economic and trade enterprise directly under the Xinjiang Production and Construction Corps and a cotton enterprise with import and export qualifications in Xinjiang. The company operates Xinjiang cotton and Central Asia cotton with a scale of more than 200,000 tons each year, and is an important international cotton merchant in the Central Asian cotton market.

Xinjiang Yinmian Storage and Transportation Co., Ltd. is one of the cotton futures delivery warehouses designated by Zhengshang. The company has effectively used the qualifications of the delivery warehouse and has opened up multiple links in industry, capital, and information. At present, in this company, with the help of a video surveillance platform, the goods have achieved GPS positioning.

An industry insider said that at present, cotton futures warehouse receipts have become a recognized "hard currency" in the cotton futures spot market. Through cotton futures warehouse receipts, cotton-related enterprises can carry out goods collateral and financing, carry out over-the-counter integrated platform warehouse receipt transactions, and carry out warehouse receipt repurchase and other businesses. This can reduce the financing costs of cotton-related enterprises, broaden financing channels, and ease the financial pressure of cotton-related enterprises to a certain extent.

According to statistics, in 2020, the registered volume of cotton futures warehouse receipts will reach 1.92 million tons, accounting for 30% of the total domestic cotton production. Among them, in 2020, the registered volume of cotton futures warehouse receipts in Xinjiang delivery warehouses reached 1.35 million tons, accounting for 70% of the total registered volume of warehouse receipts in cotton delivery warehouses nationwide during the same period. Among them, the cotton warehouse receipts registered in the delivery warehouses in the Huankuitun area of Xinjiang are 987,000 tons, and more than 50% of the cotton warehouse receipts are generated in this area. The Huankuitun area has become the core delivery benchmark area for cotton futures.

"Under the background that the quantity of warehouse receipts hit a record high, our cotton delivery warehouse in Xinjiang also cooperated with the China Fiber Industry Bureau to carry out sampling and inspection work to ensure the quality of cotton warehouse receipts, and to ensure safe storage of warehouse receipts to ensure smooth storage and exit. "The relevant person in charge of the Zhengzhou Commercial Exchange said.

The relevant person in charge of the Shanghai International Cotton Trading Center also stated that, in fact, not only in Xinjiang, but in the whole country, cotton futures have now become the pricing basis for cotton-related enterprises in spot trade, especially the use of "basis price" in cotton spot trade. It's more.

Contribute "Futures Power" to the Development of Xinjiang's Cotton Industry

During the discussion, the relevant persons in charge of the Xinjiang Uygur Autonomous Region People’s Government and the Xinjiang Production and Construction Corps stated that “cultivating and expanding Xinjiang’s characteristic and advantageous industries” is the specific requirement of the third Central Xinjiang Work Symposium. It is also the responsibility of the autonomous region government and the Xinjiang Production and Construction Corps. Key tasks during the "14th Five-Year Plan" period. The price discovery and risk management functions of the futures market will help Xinjiang's cotton industry to grow and develop.

Guo Yuanzhong, Secretary of the Party Committee of Xinjiang Securities Regulatory Bureau, introduced that in recent years, with the strong support of ZCE, Xinjiang Securities Regulatory Bureau encourages and guides futures institutions in the jurisdiction to give full play to their professional advantages, organizes various special trainings, popularizes agricultural risk management concepts, and helps industrial enterprises Use futures and financial derivatives to improve the ability to withstand market volatility risks, and promote the "insurance + futures" pilot project of cotton and other varieties to promote stable income and increase income of farmers in the jurisdiction. In 2020, futures agencies in the jurisdiction helped 95 related industrial enterprises and institutions to carry out hedging business, with a total transaction amount of 18.7 billion yuan.

Gao Jian, chairman of Xinjiang Production and Construction Corps Cotton and Linen Co., Ltd., said that since cotton futures went public in 2004, the price discovery function has played a good role. It has an important voice in the international cotton trade and also provides an important basis for the government to make relevant decisions. Especially in 2017, according to changes in the cotton spot industry structure, ZCE adjusted the cotton benchmark delivery area from the mainland to Xinjiang, which has better promoted the expansion and strength of Xinjiang's cotton industry.

"Relying on its rich natural resource endowment and industrial advantages, Xinjiang has the prerequisites for using financial product tools to manage risks." Shao Chunjie, director of the State-owned Assets Supervision and Administration Commission of the XPCC, said that in the post-epidemic era, how to use financial derivatives to manage risks is a problem for the majority of Xinjiang enterprises. An important subject of

Lu Dongsheng, general manager of ZCE, said: "Reviewing the past, ZCE has given full play to the role of cotton and other specialty agricultural product futures and has achieved significant results in helping Xinjiang's related industries to grow and strengthen. In the future, we will continue to deepen our service to Xinjiang's economy. With social development, we will continue to improve the operational quality of listed products, deepen market services, increase investment in'insurance + futures', and strive to contribute more futures forces to serve the economic and social development of Xinjiang and build a new development pattern of'dual cycle'."

"After more than 30 years of development, my country’s futures market has shown five major characteristics: diversification of trading varieties, internationalization of the futures market, linkage of futures and current development, legal personification of participants, and diversification of futures functions. This is also the case between the People’s Government of the Autonomous Region and Zheng The next step for the cooperation of the firm." Qin Quanjin said.