China starts new round of cotton sales to boost supply

BEIJING: China will start a new round of sales from its cotton reserves on Wednesday, with a total 600,000 tonnes of imported and domestic cotton to be sold off in daily auctions, according to an official notice.

It is the second batch of cotton to be released from reserves this year and is designed to better meet demand for the fibre from spinning companies, said the China Cotton Reserves Management Company in a notice published late on Tuesday by industry website Cncotton.com.

Cotton prices in China are at more than three-year highs, bolstered by strong demand from both the domestic textile sector and export markets over the last year, and high global prices.

However, demand has recently weakened while prices sought by growers in the main producing region Xinjiang for the recently harvested crop were very high, and unacceptable to spinning firms, said analysts at Cofco Futures in a report last month.

“There will be strong bidding, especially for the import lots,” a Beijing-based cotton dealer commented on the upcoming auctions.

The imported cotton, mostly from the United States and Brazil, is better quality and newer than much of the domestic cotton on offer, he said. Cotton futures traded on the Zhengzhou Commodity Exchange moved little on Wednesday, hovering around 21,560 yuan ($3,369.80)per tonne, their highest since May 2018.

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