China has sold around 1.6 million tonnes of cotton from its state-owned reserve since daily auctions began in May, sharply reducing the burdensome stockpile, said the International Cotton Advisory Committee. The intergovernmental body said that significantly smaller crops in the five major cotton-growing nations and stronger-than-expected demand reduced the global stockpile by 12 percent in just one year.
Cotton stocks outside of China, at 8.4 million tonnes, are the smallest in five years, said the ICAC. They still are vast, however, equal to a 10-month supply. The cotton stockpile in China, while down by 12 percent, to 11.3 million tonnes, greatly exceeds its annual consumption of 7.1 to 7.2 million tonnes.
Although cotton production is forecast to increase slightly worldwide during the 2016–17 season, the ICAC said it would not match consumption, so the global supply will shrink by 1 million tonnes, to 18.6 million tonnes. The tightening supply would bring a season-average price of 72 cents per pound, up 2 cents from last season.