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China's government is consulting with the textile and cotton industry on plans to sell some of its bulging cotton stockpile, according to sources, a move that may drive domestic prices lower and further reduce import demand. Beijing is estimated to hold around 11 million tonnes of cotton stocks, about half of the global total, after a three-year stockpiling programme aimed at supporting farmers.
The government is under pressure to sell its ageing stockpile, which degrades over time and is racking up storage costs. An auction last year sold less than 64,000 tonnes, much less than a target of 1 million tonnes, as the government-set prices did not attract bids. Cotton ginners and textile firms shared views on the plans with government officials at a closed-door meeting in late December organised by state-backed industry researcher Cncotton.com, said a person who attended the meeting but was not authorised to talk to media.
Zhu Beina, president of the China Cotton Textile Association, said her organisation had also been consulted regarding the plans. Du Min, a director at the Research Center for Rural Economy under the agriculture ministry, and an expert regularly consulted by the government on cotton policy, commented that, "It's completely unreasonable. Half of global stocks are in China, they have to release some."

Copyright Reuters, 2016

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