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China set to offload cotton stocks

China’s cotton auctions may shrink the country's stocks to their lowest in six years. The auctions will offer 30,000 tons of cotton a day, although more could be released if demand warrants. The country's overall inventories will fall to 9.3 million tons as by the end of this season, extending further their decline from a high of some 13 million tons reached two years ago.

China’s total stocks are expected to drop further to 7.5 million tons by the close of 2017-18, contrasting with a rise of seven per cent in world inventories, lifted by rising Indian, Pakistani and US production. This would mark the first season since 2011-12 that China’s stocks account for less than half of world inventories. World inventories at the close of next season are set at 83.9 million bales including 39.7 million bales of Chinese supplies.

However, there are doubts whether China will succeed in selling as much cotton from its 2017 auction program as it did from last year’s. The quality of the fiber offered this time may be lower. There is a feeling China sold off the best of its reserves in its 2016 sales. This suggests China’s stockpile may come in the market at a slower pace than last year.