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The sluggish textile industry poses a dilemma for domestic cotton policies

For the cotton market, in addition to bearing external pressure, there are also various difficulties that are difficult to express themselves. Firstly, global downstream textile consumption is weak, leading to high inventory.    
The United States Department of Agriculture and the International Cotton Advisory Committee each have different statistical caliber for predicting production, sales, and inventory data, but their views are generally consistent.  
Since 2012, the US Department of Agriculture has made significant adjustments to inventory data in its monthly supply and demand reports. The forecast for global inventory of 13.232 million tons in the February supply and demand report has been adjusted to 13.569 million tons in the March report, and then to 14.386 million tons in the April supply and demand report.
Among them, the April report mainly increased India's initial inventory by 762000 tons. The supply and demand report for May continued to increase global cotton final inventory and lower cotton consumption. China's inventory consumption ratio is as high as 68.4%. After multiple adjustments, the US Department of Agriculture's global consumption forecast for 2011/2012 differs by 2.5 million tons, and it has reduced China's consumption by 1.2 million tons to over 9 million tons.
Due to the cotton price protection policy initiated by China last year, a large amount of foreign cotton has been concentrated domestically, exacerbating the domestic inventory problem in China. The International Cotton Advisory Committee predicts that China's inventory will reach 5 million tons this year, more than doubling compared to the same period last year. However, inventory in other countries and regions around the world will increase by about 14% to 8.1 million tons.
The sluggish domestic textile demand and high inventory data have left domestic policy makers in a dilemma.
On the one hand, the situation of imported cotton discount has been ongoing since last year. The price difference between inside and outside is as high as thousands of yuan, and China's imports are increasing. The issue of not distributing import quotas is a headache for the country.
By distributing quotas and providing stable support for foreign cotton prices, the national policy of price protection since last year has not only protected domestic cotton farmers, but also made China the savior of global cotton farmers in the economic downturn due to its large import volume.
This business is at a loss no matter what. If a large amount of imported inventory can operate and undergo a period of high cost digestion, it can always return to downstream consumption and transfer.
But the problem is that the sluggish downstream has not provided such an opportunity, just like a mute eating Huanglian, receiving so much cotton, how to digest it in the future is also a problem. If quotas are not issued, domestic textile enterprises will use high cost cotton and face major competitors with cheaper human resources, such as Southeast Asia, which will also suffer.
Not to mention other countries adopting zero tariffs or other measures to support imported cotton, which further reduces procurement costs for enterprises and widens the gap in cotton textile costs between China and other countries. The government must not break its promise to farmers for storage and collection. It may be difficult to have both the benefits of cotton farmers and the interests of textile enterprises.

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