China, the world’s largest buyer and consumer of cotton, also owns a huge stockpile of the fiber and is the central figure in determining if market prices will remain stable in the coming year, although at low levels, says the International Cotton Advisory Committee. Last month, China said it would begin liquidating its inventory, estimated at 11.3 million tonnes – large enough to supply the world’s needs for more than five months – at current market prices. “However, no further details have been announced so far and it’s uncertain how successfully China will be able to sell off its excess cotton stock without destabilizing the market,” said ICAC, an intergovernmental body.
For five years, cotton production has out-run consumption with the resulting surplus forecast by ICAC to reach 21.9 million tonnes this year, an 11-month supply. With market prices down by 22 percent, growers around the world are planting less cotton. At the same time, cotton demand is rising. ICAC says the world surplus may be cut by 5 percent in the coming year, reducing it to a 10-month supply and keeping prices stable.