China: Update on China's 2016 State Cotton Reserve Sale
As scheduled, the Chinese government’s auction of state cotton reserves began on May 3, 2016. The auction results during its first week showed a high purchase rate of 99.9 percent with 120,350 metric tons (MT) sold. Imported cotton was fully sold and accounted for 77 percent of the total volume auctioned. This indicates a serious shortage of high-grade cotton for China’s textile sector. By comparison, with 120,350 MT already sold during the first week of the 2016 auction, the Chinese government has almost doubled the total volume sold during all of 2015. This year’s high purchase rate, compared to the low 3.4 percent purchase rate in 2015, is expected to further temper demand for cotton imports. The government’s control on the issuance of additional import quotas for cotton is already expected to reduce MY15/16 China’s cotton imports to 1.1 million MT (MMT), the lowest level in 13 years.
