China announces sale of 9mn cotton bales of reserve stock

The China National Development and Reform Commission or NRCD a few days ago announced that they would begin selling a portion of China’s estimated 58 million bales of reserve stocks beginning in early May.

According to the NRCD, 2 million metric tons (the equivalent of about 9 million 480-pound bales) will be offered for sale in 2016. Only a set amount can be purchased daily, apparently to avoid giving the appearance China is dumping cotton on the market.

According to Dr. Jody Campiche, the National Cotton Council’s vice president for economic services, it remains to be seen whether China will be any more successful in this year’s auction than last year’s – when almost no cotton was sold.

Back in February the price of cotton was about twice that of polyester, the gap has narrowed a little bit, but it is still a pretty significant gap, and that gap is not allowing cotton mill use in China to recover.

While, cotton marketing experts have been arguing about the quality of China’s cotton in reserves for three years. Now they may be about to find out just how good – or how bad it is.

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