MUMBAI (Commoditiescontrol) - In its effort to reduce its record accumulated cotton stockpiles, China started auctioning the soft commodity at discounted rates from 10th July, 2015.
However, it witnessed not so good response at the first few sessions, selling nominal volume of cotton from the reserve stockpiles. In the week ended 17 July, the auctions continued to see poor outcome.
At its auction held on 23 July, the country could sell just 997 tons of cotton out of 51,688 tons put up for sale from 2011 domestic cotton (716 tons) and imported cotton (281 tons) in the range of 11,580-13,950 yuan.
Now, market players are of the opinion that the constant poor performance at the reserve sales may prompt authorities to lower prices in order to boost volumes, or it may signal that demand is so weak that even cheap cotton can't attract millers. Either way, it's hardly a positive sign for Chinese cotton demand.
With Chinese prices biased lower because of the stockpile sales, it's likely that international cotton will be uncompetitive against domestic supplies in the second half of the year. The U.S. Department of Agriculture (USDA) estimates that China’s imports of cotton may drop to 5.75 million bales (1.25 million tons) in 2015-16, the lowest since 2002-03 and down nearly 30 percent on 2014-15. In the first half of the current year, China’s cotton imports slumped 33 percent to 933,853 metric tons, customs data shows.
Keeping in view the strong global inventories along with lesser Chinese consumption, future prospects of cotton prices by all means seems negative.
(By Commoditiescontrol Bureau; +91-22-40015534)
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