After accumulating the largest cotton surplus in the world — more than double its annual crop — China is steadily disposing of its state-held stockpile. The government is scheduled to begin daily auctions of cotton from its reserves on Monday and the International Cotton Advisory Committee says that a successful season would reduce China’s share of the world stockpile to 45 percent by the end of 2017/18 — the first time in six years that China holds less than half of the world surplus.
“Aside from China, the global stockpile of cotton is forecast to grow by 7 percent, to 8 million tons, “which could place downward pressure on prices later this season,” said the ICAC, an intergovernmental body, in a monthly assessment of the sector. The global stockpile was forecast at 16.7 million tons at the end of 2017/18 as usage outruns the harvest for the third year in a row, strengthening weak prices.
China is the second-largest cotton grower in the world, behind India, and is the leading consumer, running about 30 percent of the world supply through its mills. The ICAC says China will grow 4.8 million tonnes of cotton this year. With annual use running around 7.6 million tonnes, there will be room for more than 1 million tonnes of imports despite drawing down its domestic stockpile.