Chinas cotton stocks depress prices

25 August 1999

China’s cotton stocks depress prices

WORLD cotton prices are depressed as a stockpile of the commodity balloons in Chinas warehouses, reports the Financial Times.

But it says prices are falling in the face of “increasingly aggressive” cotton export sales by China.

Chinese cotton stocks are estimated to be around 15.5 million bales, equal to about 80% of Chinas annual production and about 40% of world cotton stocks.

Stocks will be augmented further by the Chinese harvest but the Financial Times says the situation is being aggravated by Chinese government policy.

State-owned cotton supply firms are unwilling to sell stockpiled cotton to textile mills because at current world prices this would mean crystallising losses.

Analysts believe the losses incurred by cotton groups are huge and, if nothing is sold, the Chinese state will subsidise the unrealised losses on stock write-downs.

• Financial Times 24/08/99 page 28