China holds almost 60 percent of global stock almost more than 10 million tonnes, to unwind its cotton stockpiling as held the first auction of raw cotton and test a target price policy in Xinjiang, the main cotton area. In the first four days of the auction starting April 1, it has managed to sell off only 1.86 lakh tonnes of cotton.

The auction offered 4.77 lakh tonnes of which 1.86 lakh tonnes around 39 percent of cotton are sold with minimum bidding price of 17,250 Yuan ($2,800) per tonne. After the first day’s successful round, the sales were seen plummeting to less than half of that was offered on daily auction.

The auction’s first day saw cotton sales reaching nearly 80 percent, but the rate dropped to as low as 20 percent in the consequent days.

The world's top cotton buyer are closely monitoring the liquidation of cotton reserves by China as a successful round of sales is likely to pressure imports and weigh on international prices.

While, under the test a target price policy, the Chinese cotton growing farmers can receive direct subsidies from the government if the market prices drop below the level. The target price set of cotton crop for this cotton crop is 19,800 yuan.