China, the world's top cotton consumer, kept volumes of cotton offered from its state reserves steady on Monday, defying expectations that it could ramp up sales to help ease tight domestic supplies after stockpiling most of the domestic crop. A government official had previously said Beijing would boost sales of state cotton reserves from April, which would hurt domestic and international cotton prices.
Beijing officially finished stockpiling domestic cotton on Friday, with market participants awaiting an announcement on the future of the controversial policy, which has seen China buy nearly 10 million tonnes, or about 60 percent of global cotton stocks, since 2011, pressuring global supply. China will offer 69,971 tonnes of cotton from state reserves, with daily volumes almost unchanged from its offer in the previous sale, the state-owned China National Cotton Reserves Corporation said On Monday.
Analysts and industry officials expect Beijing to this year sell about 3 million tonnes of cotton from state reserves of around 10 million tonnes, stockpiled since 2011. Beijing has sold 1 million tonnes from state reserves since January, just 30 percent of a total offer of 3.36 million tonnes, the China Cotton Association said. "The government may change the volumes more or less later. But (the actual) sales will continue as expected. The government has to sell those big volumes of reserves, enough for the country's one-year consumption," said Zhang Xiangjun, an analyst with Beijing CIFCO Futures Co Ltd.
Zhengzhou cotton was traded little changed at 20,235 yuan per tonne, down 0.4 percent in the morning session amid a wide sell-off in commodities. New York cotton ended lower on Thursday but still posted an 18 percent quarterly gain after the US Department of Agriculture forecast US farmers will sow a historically small crop of 10 million acres as they switch to higher-priced.
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