China Starts Selling Stockpile

By Jim.Robinson|January 16, 2013

China has begun the start of sales from its state reserves, which total an estimated 8.84 million tonnes, or half of the world’s total cotton supply. The sale of 40,145 tonnes was forecast as a way to make room for purchases from the domestic market. By doing this, China is supporting cotton returns to farmers while keeping prices low enough so as not to damage the competition between domestic mills.

A higher production and slightly lower consumption is slated to result in ending stocks of 81.7 million bales, although the International Cotton Advisory Board reports that the stockpile could potentially hit 10 million tonnes.

Production is raised in China, where recent levels of cotton classings and purchases for the national reserve indicate that the crop is larger than previously estimated. Although eastern China suffered from heavy rainfall and typhoon damage late in the growing season, USDA reports that record yields will offset any potential setbacks.

China’s imports are forecast higher due to strong imports to date and tight free stocks resulting from the large accumulation of cotton in the national reserve.