China plans to reduce its growing cotton inventories in the next three or more years, the general counsel for China National Cotton Reserves Corp (CNCRC), the country's state-owned reserve, said on Monday. At a cotton conference in New York on Monday, CNCRC's General Counsel Liu Hua reaffirmed Beijing's plans to continue its current cotton stockpiling program through 2013. At the same time, he said, the country needs to whittle down its growing inventories.
China, the world's top textile market, is forecast to hold more than 60 percent of global inventories by the end of July 2014, with inventories ballooning as a result of a government stockpiling program and falling domestic consumption. China's domestic use fell to an estimated 36 million 480-lb bales in the 2012/13 crop year that ends on July 31 from 38 million 480-lb bales during the previous year. It make take three or more years to achieve a "better" ratio between inventory and consumption, he said.
Beijing's stockpiling program, begun in 2011, has supported global cotton prices, so plans to reduce stocks slowly could provide a soft landing for the cotton market, according to traders who have said any plans from China to release inventories speedily or cut imports could send prices plunging. The world is forecast to hold a record 94.34 million bales by the end of the 2013/14 crop year, but China's hold on the majority of those has created a sense of tightening supplies in the rest of the world, cotton traders have said.
Comments
Comments are closed.