Japan and Australia announced last month that El Nino had occurred. In that month, the sea surface temperature index detected by the Australian National Weather Service was consistent with the trend of the strong El Ni? o phenomenon in 1997-98, which means that the El Ni? o phenomenon in the Pacific region is constantly strengthening, and the strongest El Ni? o on record may appear.
(Image from BOC International)
When El Nino struck, the southeast trade winds weakened, the upwelling phenomenon of cold water in the eastern Pacific disappeared, and the surface warm water returned eastward, which led to the rise of the sea surface in the equatorial eastern Pacific and the rise of the sea surface water temperature, and the coastal areas of Peru and Ecuador changed from cold ocean currents to warm ocean currents. Due to the change of seawater temperature, air convection changes, resulting in dry climate on the east coast of Asia and humid climate on the west coast of America.
As the main producing areas of soybeans, corn, sugarcane, natural rubber and cotton, Asia and America are naturally affected by El Ni? o.. BOC International said that once El Ni? o happens, it is first reflected in the market's concern about the decline in agricultural output, which will lead to the expectation of price increase and enhance confidence in investment in agriculture.
Haitong Securities concluded in the report that El Ni? o can always drive up the price of crops, but the impact on output is mixed. Wheat production is usually greatly reduced, soybean production is usually greatly increased, and rice and corn production fluctuates little.
Wheat futures investors of Chicago Board of Trade (CBOT), a subsidiary of Chicago Mercantile Exchange (CME), quickly and seriously responded to the warning that El Ni? o was coming. As shown in the following figure, on May 14, the wheat futures that have exceeded 135 as the global industry benchmark jumped sharply:
What about cotton? The research reports of two brokers show that the impact of El Ni? o on cotton is relatively complicated considering the inventory factors.
Cotton producing areas are mainly concentrated in China, the United States, India, Pakistan and other countries, among which China and India account for the most, accounting for about 50% of the total. According to the data compiled by BOC International, among the global cotton output of 25.73 million tons in 20 13, China produced 6.7 million tons, accounting for 26.0%. India's output is 6.34 million tons, accounting for 24.6%; The United States produced 2.87 million tons, accounting for11.2%; Pakistan's output is 2.07 million tons, accounting for 8. 1%, and the total output of the top four countries accounts for 70.0%.
Cotton likes temperature and fears cold, and the most suitable temperature range for its growth and development is 20 ~ 30℃. In order to achieve the goal of early development, stable growth and high yield, cotton seedling needs stable temperature. Therefore, El Nino, which brings drought or waterlogging, and La Nina, which accompany it, will greatly reduce cotton production and then affect cotton prices.
According to the statistics of Haitong Securities, since 2000, cotton prices have risen sharply twice, both in the year when El Ni? o appeared: once in 2002, it rose by 38% year-on-year; The other occurred in 2009, with a year-on-year increase of 36%, and continued to increase by 85% in 20 10.
CME cotton futures investors brought the El Nino effect from 2009 to 20 10 to the extreme. As shown in the figure, CME cotton futures rose by 5.34 times from the low point in March 2009 to the high point of 20 1 1 in March.
Haitong Securities said that El Ni? o had a significant impact on cotton prices. Because La Nina is often accompanied by El Ni? o, we should be alert to the possible extension of price fluctuations.
Of course, there are many factors that affect cotton prices, not only by the relationship between supply and demand, but also by agricultural policies, textiles and foreign trade policies. BOC International further decomposed the impact of El Ni? o on cotton production in China and India, and found that:
India: During the El Ni? o period, severe droughts often occurred in India from June to September, but at this time, the drought had little impact on cotton production. Historically, during the El Ni? o period, the probability of increasing and decreasing cotton production in India was almost the same. The year of the biggest change in the rate of return is the increase of 1953/ 1954 and the decrease of 15% and 1986/ 1987, followed by 13%.
China: During El Nino, there are often droughts of different degrees in vast areas in northern China. High temperature and drought often lead to the outbreak of diseases such as cotton bollworm, which will have a slight impact on the growth of cotton production. However, overall, the impact of El Ni? o weather on cotton production in China can be ignored. Whether it is 1994/95 or 1997/ 1998, the cotton yield in China has increased.
Combined with the current cotton inventory backlog:
20 12/ 13, USDA made statistics on cotton production and sales in China. The total domestic cotton output was 6.858 million tons, down 6% year-on-year, and the import volume was 2.395 million tons, down 55% year-on-year. At the same time, domestic consumption was 7.729 million tons, down 18.6% year-on-year, and the inventory at the end of the same period was 865,438+
In 20 12/ 13, the global cotton output was 25.437 million tons, and the global cotton consumption was 2315100000 tons. In the same period, the ending inventory17.477 million tons, an increase of 65.438+08% over the previous year, and the ending inventory consumption rate was 75.438%. Except for Chinese mainland, the total global cotton output is185.79 million tons, and the total global cotton consumption is154.29 million tons, which is1/0000 tons lower than the previous year. The ending inventory was 9.397 million tons, and the ending inventory consumption rate was 60.9%.
Therefore, BOC International's view is that unless there is a strong El Ni? o weather, the increase in cotton prices (futures) caused by weather factors is more short-lived and predictable, and has little impact on the overall supply and demand environment. When the consumption ratio of cotton stock exceeds 100%, the basis of cotton price increase is still very weak.
Judging from the trend of CME cotton futures, there are indeed differences in the market. Japan and Australia first announced (May 12) that cotton futures rose sharply when El Ni? o came, but fell back a few days later and the market fluctuated. ...
There is a report on Wall Street.