Cotton stockpiling by China, the world's top cotton buyer is a driver of global prices. China's state cotton stockpile reached 5.5 million tonnes by the end of last week, after the country bought 227,700 tonnes of domestic fibre in its smallest weekly purchase since the middle of October, official statistics showed on Monday.

China's buying for state reserves, now in its third year, influences import demand as it leaves little available for domestic sale and pushes up local prices.

But Beijing plans to end its stockpiling programme this year and test a system of direct subsidies for cotton growers in Xinjiang, China's top cotton-growing region. Almost 69 percent of the purchases to date for state cotton reserves have been from Xinjiang. However traders believe almost all of the region's fibre has been bought up, reducing supply to the reserves. Last week, only 9.4 percent of the targeted volume to be purchased from Xinjiang was bought, compared with 19.6 percent the previous week.

The reserves have also sold off 380,000 tonnes of fibre through daily auctions since November, or 41 percent of the cotton offered for sale. As of January 17, total cotton stockpiles were slightly behind the 5.68 million tonnes reached this time in 2013.