5. What factors should be paid attention to when participating in Zhengzhou cotton futures trading?

Answer: (1) Cotton price trends at home and abroad. Mainly concerned about cotton futures prices on the New York Futures Exchange, CotlookA and CotlookB indexes, spot prices in the seven major US markets, foreign cotton prices in China's main ports, CncottonA, CncottonB cotton price index of China Cotton Network, CCIndex cotton index of China Cotton Information Network, Matching transaction prices of cotton in the Chinese cotton trading market.

(2) Global cotton supply and demand. Mainly include: cotton production in China and the United States and other major cotton producing countries. World cotton production is very unstable and has strong cycle changes. What needs to be emphasized here is the weather factor. Climate change has a great impact on cotton production; China’s cotton consumption, China It is a large cotton consumer, and its cotton consumption will fluctuate to a certain extent with the changes in China's textile exports and changes in the prices of alternatives such as chemical fiber; China's cotton imports, U.S. cotton exports; changes in China and the world's cotton stocks, changes in stocks Reflect the tightness of cotton supply and demand; Economic cycle: With the deepening of economic globalization, the economic cycle of different countries has synchronized characteristics. At different stages of the economic cycle, cotton consumption is also different. During the recession period, global cotton The downward trend, while in the period of economic growth, cotton consumption has rebounded rapidly; industrial policy: China's industrial policy and other cotton agricultural subsidy policies and import and export policies of various countries have also become one of the uncertain factors of price fluctuations.

6. What are the main sources of cotton information?

A: At present, the International Cotton Advisory Committee (ICAC), the United States Department of Agriculture (USDA), and the United Kingdom's Cotlook (COTLOOK) are the main institutions engaged in analysis and outlook on the international situation of cotton. They each have their own independent statistics and forecasts. The figures are constantly revised and published regularly. Among them, ICAC is an organization composed of the governments of 43 cotton producing and consuming countries (excluding mainland China). The information released by it on world cotton production, supply, demand and prices plays an extremely important role in guiding the market; USDA A specialized agency is set up, which publishes a forecast report on global cotton production, sales, and inventory every month, and a weekly report on cotton export sales. It is the main reference source for cotton transactions; COTLOOK compiles internationally accepted cotton spot prices CotlookA and B indexes daily, and publishes the world weekly Cotton Outlook Report.

At present, there are many professional cotton websites in China. The more famous ones are: China Cotton Information Network, China Cotton Network, China Cotton Industry Information Network, China Textile Information Network, Western Cotton Information Network, etc. In addition, you can go to the New York Futures Exchange, Zhengzhou Commodity Exchange, "Futures Daily" and other websites to learn about cotton futures.

7. How do governments and cotton companies use the futures market?

A: At present, the New York Futures Exchange is the world’s largest cotton market. In recent years, the annual trading volume of cotton futures is equivalent to 17 to 20 times the total output of US cotton. The exchange's cotton futures have a wide range of participation, and cotton futures prices have high authority in the trade and management circles, and have become an indispensable reference for decision-making in the US cotton industry and the governments of cotton-producing countries in the world.

Cotton growers use the futures market to hedge. Cotton planting farmers in the United States, Britain, India, Australia and other countries often set their own cotton planting area according to the futures price of the year, and engage in cotton hedging transactions. Cotton merchants, cotton mills and cotton cooperatives in many countries are engaged in cotton hedging transactions on the New York Futures Exchange to avoid the risks of the spot market.

8. How is the US cotton subsidy regulated?

Answer: (1) Productive subsidies: Productive subsidies directly supplement cotton growers, including direct subsidies and anti-crisis subsidies. Direct subsidies have nothing to do with cotton production prices. To obtain direct subsidies, cotton growers must sign an annual planting agreement with the government and specify their basic planting area and subsidy yield in the agreement. The current subsidy rate for direct subsidies is 6.67 cents/lb . Anti-crisis subsidies are subsidies based on price changes, and start when the effective price is lower than the target price. The target price is the minimum protection price stipulated by the New Agriculture Act, which currently stands at 72.4 cents per pound for upland cotton. The effective price consists of the following two parts: one is the direct subsidy rate; the other is the average of the national cotton farm prices in the 12 months of the year and the higher of the state’s loan subsidy rate. The specific calculation is: anti-crisis subsidies = 72.4 cents/pound-67 cents/pound + (the higher of the average price of 12-month national cotton farm prices or the cotton loan subsidy rate).

(2) Sales subsidies: Sales subsidies are also subsidies to producers. In the process of selling cotton, cotton farmers can directly sell cotton when the price of cotton is high, or they can choose to sell to the government to obtain loans when the price is low. If the price of cotton increases in the future, the cotton farmers can choose to repay the loan to redeem the cotton for sale in the market; if the market price continues to slump in the future, the cotton farmers can choose to leave the cotton directly in the hands of the government and auction them by the government. The new agricultural bill raises the product loan subsidy rate for sales subsidies to 52 cents/lb, which is 0.08 cents/lb higher than the 1996 bill. The actual subsidy for cotton farmers can be calculated based on the product loan subsidy rate. The calculation method is based on the World Adjusted Price (AWP) calculated by the US Department of Agriculture.

(3) Trade subsidy: The specific subsidy method is calculated based on the comparison of the quoted price of US cotton in the Nordic ports and the CotlookA index. In the new agricultural bill, subsidies are granted as long as the CIF of the US cotton in the Nordic ports exceeds the CotlookA index for four consecutive weeks. The subsidy applies to cotton merchants, exporters, and domestic textile companies. The purpose of issuing subsidies is to encourage spinning mills to use their own cotton and promote US cotton exports.

(4) Provisions for restrictive subsidies: According to the New Agriculture Act, the government’s subsidized loans for agriculture will reach US$190 billion in the next 10 years, an increase of 80% over the previous agriculture bill. Among them, the total amount of market sales subsidy loans (CCC) granted by the government to agricultural products is distributed annually: 400 million US dollars in 2002, 700 million US dollars in 2003, 1 billion US dollars in 2004, and 1.2 billion US dollars in 2005-2006. By 2007, it will reach 1.3 billion US dollars.

Specifically, the direct subsidy limit for each cotton farmer in each market year cannot exceed US$40,000, the anti-crisis subsidies it can enjoy cannot exceed US$65,000; the market sales subsidy it can enjoy cannot exceed US$75,000. If the adjusted total income of cotton farmers exceeds US$2.5 million for three consecutive years, no subsidies will be granted unless 75% of the total income of the cotton farmers comes from agricultural production.